Finances in retirement can be confusing so we’ve turned to finance expert Noel Whittaker to answer your questions. This week he deals with inheritance and gifting rules.
Spending an inheritance
Q. Jennie
I am due to come into a considerably large inheritance, approximately $300,000. While this is indeed welcome, I’m worried about the effect it will have on my Age Pension once the asset thresholds change in January. I’m considering buying a more expensive house so that it doesn’t count as an asset – but is this the best thing to do?
Answer. The costs of selling and buying a new home will be more than $50,000 – this would be far more than any money you could gain by getting an increased pension. You could reduce your assets by gifting $10,000, and by placing $12,500 in a funeral bond, but just keep in mind that every hundred thousand dollars you dispose of increases your pension by just $150 a week. Therefore it takes 13 years to get back the money you spend or give away. I suggest you just live normally, and enjoy the fact that as your assets reduce due to normal spending your Age Pension should increase.
When do gifting rules start?
Q. Mary
I understand that Centrelink has certain rules around gifting but I was wondering, if I give away some of my savings to my family before I apply for the Age Pension, would Centrelink regard this as a deprived asset? I would like to reduce my assets as the new thresholds that apply from 1 January 2017 mean I will receive less Age Pension.
Answer. Any money given away in excess of the limits ($10,000 a year with a maximum of $30,000 over five years) is treated as a deprived asset and will be subject to deeming for the next five years. This includes any money gifted in the five-years prior to your Age Pension claim.
Do you have a question you’d like Noel to tackle? Email us at [email protected]
Related articles:
Your super questions answered
Will your retirement be affected?
