Many of our customers have asked us this question. As life expectancy increases it is no longer unusual for people to receive an inheritance much later in life. If you do receive a lump sum inheritance, or any lump sum, you need to be aware of a few important factors.
Tell Centrelink
This is really important. You must tell Centrelink with 14 days of receiving the lump sum. If you don’t, you could be overpaid, and you will need to repay the money to Centrelink. This could be particularly difficult if you take a long time to tell them and have already spent the money. Our Keeping Your Pension service can help you keep Centrelink up to date if you need assistance. Email us at hello@retirementessentials.com.au if you would like to know more about this service.
How will your entitlements be affected?
As inheritances are typically hard to predict, they are exempt from the Centrelink income test. For example, if you received an inheritance of $200,000 Centrelink would not consider this to be $200,000 of income.
That doesn’t mean you won’t be affected though. Depending on what you do with the inheritance it could have a major impact on you. So what will and won’t affect you?
Pay off the mortgage or renovate
If you own your home, your home is considered to be an exempt asset and doesn’t count towards the assets test. If you use the inherited money to pay off your mortgage or renovate your home then it won’t impact your entitlements.
Save or invest the money
If you are of Age Pension age and you:
- Put the money in the bank or
- Invest it, then
Centrelink will apply the deeming rules to that money. In this particular case, Centrelink would deem that the $200,000 is earning $3,440 for a single person which would all count towards the income test. Those on a part pension will definitely find their pension payments will be reduced while those on a full Age Pension could also be impacted and see their entitlements reduced.
In addition, the money will now be classified as an asset. The extra $200,000 in assets is highly likely to affect your entitlements depending where you already sit against the assets test. You can see the latest thresholds for the assets and income test at the bottom of this email.
Use some for a holiday
If you use some of the inherited money to go on that once in a lifetime holiday then the money you have spent won’t impact your entitlements.
Gift a small portion of it
You can give away some money as long as you do not exceed the Centrelink gifting rules. There is a limit to how much you can give away in one year. $10,000 can be gifted in 1 financial year (regardless of whether you are a couple or single) or $30,000 over 5 financial years – this can’t include more than $10,000 in a single financial year.
You can check for yourself
If you have received an inheritance, or think you might in the future, you can use our eligibility calculator to see how this might affect your entitlements. We also love to get your comments so let us know your opinion by commenting below.
What if I win money on horseracing.
Will that be considered as income ?
I received $112,000 as an inheritance. I purchased a block of land using $60,000 of the money and the other went into my bank. I receive Newstart and family tax benefit A and B and am a single mother. How will I be effected
Hi Susan, thanks for seeking clarity! We do not specialise in Job Seeker(Newstart) or Family Tax Benefit payments so could not clarify the impact (if any) with certainty. Generally speaking though you need to notify Centrelink of any increase or decrease in your income/assets so if you have not already you should notify Centrelink of the payment you received and how it has been used.
my husband is going to receive around $500000 can he put it in to my super with out losing his disability pension
Hi Petra, thanks for sharing your situation with us! What you are suggesting is an option but there are a few ifs, buts and maybes. For us to understand your situation in full to then provide all of your options and the pros/cons for you to consider you should book an Understanding More About Super consultation.
hi ..my mum is on an aged pension ( widow) and doesnt own
a home or have an investments.. id like to give her $500 per month
towards bills but am worried if this will afect her pension?
Hi Paul, thanks for reaching out. It’s wonderful that you are able to help your Mum. There is a list of regular payments that are classified as exempt income for the purposes of calculating age pension entitlements, and one of these is listed as “regular payments from a close relative”. You can access a link that has more information on the Services Australia website by clicking here. Best wishes to both you and your Mum.
I am on disability pension and receive over 100.000 inheritance I pay my house off does that affect my pension
Hi Tony, thanks for reaching out with your question! The house you live in is exempt from assessment whether there is a mortgage owed against it or not. As such you could pay off your mortgage and there would be no impact to your Age Pension payments.
Fantastic article thank you!
I’m on a disability pension & I’ve inherited a share of Dads property with my brother. The other part share is owned by his partner. So there’s 3 of us who have interest in the property.
As per Dads request (& rightly so) he is allowing his partner to stay in the house until her death. I will not be able to access my share until she’s passed (which could be 10+ yrs away) plus I have to pay for property upkeep etc.
Is it likely that Centrelink will drop my pension in this instance?
I obviously want to do the right thing but I can’t afford a reduction in my pension with the extra costs I’m facing. I don’t really consider it an asset at this stage. Would like to hear your opinion on this. Thank you.
This seems very unfair I have helped my own children before retirement and now have eight grand children I would dearly love to assist with their homes. Surely if everyone received a taxed pension this would eliminate many expenses, After enduring the experience and expense of aged care for my late husband I am very concerned about how I will afford same if needed, hope it never happens to me. The Government of the day should not have any say in how people who have worked hard and paid taxes for many years spend their retirement or their finance.
I am on Centrelink Disability Support Pension with ‘Indefinite Portability’ (which allows me to live overseas and receive full benefit. I currently reside in Thailand.
My father passed away early last year.. and finally next Monday the executor of the estate will deposit $401,000 into my Australian bank account.
I am yet to have any plan for the money.
Q. When and how (or do I have to?) tell Centrelink of this. And what affect will it have to my benefit.
thanks
Hi Daniel. You need to tell Centrelink of changes to your circumstances within 14 days of the change occurring. The additional money in your bank account will affect your entitlements as it will be treated as an asset
Lee my mum passed away and i will recive about $40000 do i need to tell centerlink
Hi Lee, thank you for reaching out with your enquiry. Centrelink expect you to notify them of any change to your financial investments of +/- $2,000 within 14 days of the change occurring. Once you receive the payment into your account you should request an interim/out of cycle statement from your bank, upload the statement to Centrelink and then call them to ensure the change is made and your pension is recalculated accordingly. You may wish to update Centrelink on all of your other asset values in case there have been other changes that you have not yet notified Centrelink about.
I agree….. surely the essence of maintaining family unity is being eroded. I feel that if you have got off you ‘bum’ ( and there are other words) then you should not be penalized but rewarded for your contribution to society. Our wishes should not be controlled via government red tape when we live in a democratic country. The limit of $10,000 per year with a maximum of $30,000 over five years seems very ineffective considering how hard it is for our younger population to save a deposit and to buy their first home. Wouldn’t it be in the interest for any governments (either now or in the future) to allow some leniency of owning your first home considering the well publicized difficulties and the amount of money being allocated and given to kick-start the building/construction industry. Maybe to add more fuel to the control exercised by government agencies (putting tongue in cheek) – we should be able to show how we have assisted our family members in purchasing the first home as we have to show all other documentation in the format that is requested/demanded. After all it is our money, our family and our children’s future that is being eroded.
That’s fair enough. Extra assets mean you don’t need as much pension, at least that is what we are meant to believe with assets just over the max assets test.
Excellent useable information thank you
Can someone tell me how valuable inherited artwork is treated by Centrelink please. Does it have to be declared as an asset and will that affect my age pension? What if I sell it? I cant find any reference to this sort of inheritance on the Centrelink website or anywhere else. Thank you.
Hi Leonie. Artwork will be counted amongst your personal possessions for the assets test. The same will be the case with the proceeds should you choose to sell it.
I recieved inheritance of 67.000 in 2019. Im on age pension.
I havent reported it..
Iv spent aprox 40.000..
Would this situation be a problem if i report it now.
I have no assets or other savings.
Do you sugest i report as soon as possable
Thankyou..Jphn
Hi, if you are on the age pension you are required to report changes in your circumstances to Centrelink such as an inheritance. Based upon what you have told us you would be well below the assets threshold so your inheritance wouldn’t have affected your entitlements. Centrelink may however wish to talk to you about why it wasn’t reported at the time and you take the opportunity to update all your assets including things such as a car and personal assets
Hello, my mother is receiving a full pension and is living in social housing.
Sadly my sister passed away and has no spouse or dependents. She has left all her estate to our mother.
If a home is purchased from this inheritance for my mother will it impact her pension?
Can we purchase the home from an estate bank account?
Hi Tracey, I’m sorry to hear of your sister’s passing, my condolences for you and your mother’s loss. The act of your mother buying a house to live in does not cause any ripples with Centrelink however it may mean that her living situation is assessed differently which could change things. If she is currently being assessed as a non-homeowner (which is sounds like she is) then when she buys the house and becomes a homeowner, there will be lower income and asset thresholds applied which could reduce her pension. CLICK HERE to read about the thresholds and see if the lower limits will impact her or not.
I am receiving an inheritance in two parts, I receive DSP, the first part of the inheritance is $35,000 and the second approximately $90,000 I own a relocatable home which is my permanent dwelling, will this amount affect my Pension?
Hi Kay, Thanks for your comment! We do not specialise in the DSP so we cannot say for sure that it will impact your payment but similar to John you should report the amounts to Centrelink regardless so they can update your asset values accordingly.
I am on a disability pension and my mother passed away a month ago. I currently rent, and will not be able to afford to buy a home with my inheritance (which will likely be between $150,000 and $200,000). So I don’t have a home which I can pay off and I am worried that I might lose my disability pension. Am I likely to lose my pension if I don’t spend this money immediately? I do need a new car, so would like to put some of the money towards that, but I don’t want to waste my inheritance either. Unsure what I should do and feeling quite stressed about this.
Hi Sandra, if you look up the assets test for pensions you’ll see the limits. Buying a car doesn’t mean you’ve spent the money as the car is also considered an asset . If you don’t have any other significant assets this inheritance won’t affect your Centrelink payment as the cut off for full pension is $480,000 approx for non home owners. So unless your assets including the inheritance add up to $480k your payment won’t be affected.
Good information Thank you. My questions:
1.what are the effects of inheriting a house? how is the value of the house calculated
2. I you also inherit cash and a house how is this calculated? (for a single olde age pensioner)
Hi Antonina, if you or anyone else reading would like to talk about your situation in detail, we offer 30min consultations at a cost of $75. We can clarify how Centrelink will assess you specifically and help guide you on any related matters that might impact your Age Pension. If you wish to proceed please CLICK HERE to book the best suitable time available.
we are dowsizing and seling our house and moving into a retirement village.After everything is paid for we will be around $20 000 over the threshold for a married couple pension. If we loose our pension do we have appy from scratch once our assets drop below the $945 000 or do wejust have to notify Centrelink andget our payments back?
Hi Ray, good luck with all the selling, buying and moving are are undertaking! You are correct I’m afraid. Being over the threshold means the pension and associated card are cancelled. Therefore to regain them you would need to lodge a new claim once you were back under the threshold. I can’t promise anything however we do offer “Maximise Your Entitlements” consultations which are designed to review your specific situations and what options (if any) you may have to stay on the pension. If you’d like us to have a look at your situation, CLICK HERE to book.
I have $130000. In my account which is for my children from their grandfathers death. I am self funded retired and 64 I need to give $20000. To 2 children but my partner is on pension of $729 approx. What is the best way to do this and will it have any affect on my hubby’s pension.
Hi Mx Welling, if you or anyone else reading would like to talk about your situation in detail, we offer 30min consultations at a cost of $75. We can clarify how Centrelink will assess you specifically and help guide you on any related matters that might impact your Age Pension. If you wish to proceed please CLICK HERE to book the best suitable time available.
My parents are pensioners living on the poverty line, and are about to receive a $100,000 inheritance. They want to purchase a house to live in but would never get approved for a mortgage. They want to give me the money to use as a deposit to purchase the property in my name, for them to live in (I can comfortably afford to do this and pay the mortgage). Would centrelink consider this a gift even though they’ll be the primary residents of the asset? Or would my parents need to be listed on the title of the property in order for the $100,000 not to be considered a gift?
Hi Jenny, what an important situation to get clarity on! There is good news, Centrelink refer to this situation as Granny Flat Interest and you can read more about it HERE. Essentially though, it means your parents can give you a sum of money in exchange for the right to live in a property (that they do not own) for the rest of their life. It will not count as gifting so long as the amount they give you is not more than the value of the property which based on the figures you have mentioned will not likely be a problem.
I will be I hearing approx $240 thousand
I havecoffered $200 thousand to my son to assist buying a home.
How will this affect my pension?
I have a son with a mental illness whom I haven’t seen for 30 years. My current will divides my assets between both sons more or less equally but I’m worried about leaving the former so much, ( let’s say $500,000) that it will negate his pension. Besides which, I have no idea whether he would be competent enough to manage it. I’m wondering whether to leave him a smaller amount which could make his life more comfortable but he would still have all the advantages of remaining on the pension. What could this a out be under Centrelink rules? He does not own a house and presumably lives in A rental State Housing flat.
Hi, I received inheritance of $550k. I found that lump sum such as inheritance exempts from the income test on their web-site https://www.servicesaustralia.gov.au/lump-sums-while-income-support?context=22526 Will Centrelink deem my Disability Support pension ? Thank you
Sorry Irina, we do not specialise in Disability Support payments so could not accurately confirm what the impacts might be. I suggest you call Centrelink’s Disability Support line on 132 717 Monday to Friday 8am-5pm.
Hi
My father will inherit the RAD from my mother’s aged care facility once the estate is settled. When does that cash become deemable? Only once the cash actually hits his account?
Hi Susan, our condolences on your mother’s passing. You are correct that the balance will be deemed once it is received by your father. Until then it is still considered the Aged Care Facility’s asset, not your father’s.
I’ve used the Centrelink nursing home assessment tool, it estimates that based on our current situation if my husband needs to go into care there would be an approx daily fee of $100 per day.
When my elderly mother passes away I will receive an approx $200,000 inheritance, when I receive this will it be taken into account and increase the daily fee payable?
Hi Janice, we only specialise in Age Pension and Commonwealth Seniors Health Card so we could not confidently advise on how other Centrelink entitlements may be impacted.
Once probate is settled, if a sibling buys our deceased mother’s house by taking over the mortgage and pay my share of the inheritance (approx. $100,000) to me in instalments over a couple of years rather than paying me a lump sum, would I be liable to pay tax on these instalments? And would the instalments affect my Age Pension?
Hi Colleen, thanks for reaching out! We can’t answer your question regarding potential tax liability and recommend you speak with a tax agent to be certain. In terms of how these payments impact your Age Pension, you would need to provide Centrelink with a new copy of your bank account statement as each payment comes through so that Centrelink know how much your assets have increased by and can recalculate your pension payments if need be.
Hi, I’m about to receive $100,00 inheritance approx. I’m on a part aged pension and family allowance (one high school child). My wife works as a permanent casual farm worker. We have under $10k in savings and rent a house. How will this amount affect my pension and what if it’s split between the two of us – same? Thanks.
Hi Bret, thanks for seeking assistance! The best thing for you to do is complete an Age Pension eligiblity calculator as the amount of pension you receive depends on multiple factors regarding your income and assets. You can find Retirement Essentials’ free calculator HERE.
Hi Steven
My wife will shortly inherit $510,000 from her mothers estate .We are both on the full aged pension . I understand that if she deposits this amount into her accumulated super fund she would not be penalised by the income and assets test
We are considering in about six months time to sell our home and buy a retirement home off the plan.we would need the $510,000 to go towards the cost of the home.If we withdraw this amount as a one off would her super balance still be considered in the accumulation mode
Hi Chris, Thanks for your question.
The impact will be different depending on circumstances (age plays a factor, amounts, timing of sale and purchase, etc.). I think you would benefit from booking an advice consultation appointment with myself or one of my colleagues. You can find more information about this service here. Best of luck with your plans!
My wife and I are about to receive an inheritance of $20,000 from wife’s mother overseas. Will this affect our full pension from government, and also will I need to pay my student debt which happened more than 20 years ago? We are currently on full pension and receive petty interests from our deposits from the bank of less than $2000 per year?
Hi Frederick, our condolences on the passing of your mother-in-law. The inheritance you receive may impact your pension but it is not likely. The best thing to do is give Centrelink a copy of your bank statement showing the funds coming in and the new balance, along with statements for any other financial assets in you/your wife’s name so that Centrelink can update their records and determine whether there is any change in your Age Pension amount based on the current value of your assets. We cannot comment on the student debt as this is outside of our expertise.
I am about to inherit $250000 from my mothers estate currently I receive a full pension and have assets of $175000 given me a total of $425000 how would this affect my pension and how much would it decreaseby
Hi Robert. It could affect your pension. How much will depend on whether you are a home owner or not and if you are single or part of a couple, as well as any other assets you have. Here is a link to how the thresholds work as well as a link to our eligibility calculator where you can input your inheritance and calculate how much you will be likely to receive.
I am a home owner single and have assets of $145000.00 this include my super fund that I have closed I am expecting to receive $275000.00 form a deceased estate
hi I recently inherited 17,000 from my mother, I drew out that amount to use some to do up my mother’s grave and I want to put rest in my safe at home with my will, for down track I do receive a small amount of centerlink a fortnight, plus I work only one day a week, because my husband works too full-time, will my $17,000 be exempt from centerlink, im going to tell them about my inheritance, and that what I be doing with it. thanks.
Hi Michele. It is not exempt unfortunately. Here is an article we have recently written on this subject.
Handling an inheritance.
Hi,
I am 70yo & my wife 69yo. We own our home & have about $140k each in our super of which we draw $300/mth.
We are on the age pension & not big spenders or holiday people so live adequately. (pay our bills/feed ouselves & maintain priv health insurance).
We are about to receive approx $400k each from my mother’s estate. Will this basically eliminate our pensions and/or can we place the inheritance into our respective Super?
thank you
Hi Allan, thank you for reaching out and I’m sorry to hear of your Mother’s passing.
Whether you invest the money into your super or leave it in a bank account, Centrelink will still count it as an asset either way. The asset threshold for a couple who own their home is $935,000 and based on the figures you provided you and your wife will have $1,080,000. Therefore once the funds are received you should provide Centrelink with a bank statement or equivalent to show the increase in assets so they can stop your payments to avoid any potential debt needing to be repaid.
You may be eligible for a Commonwealth Seniors Health Card as this is only income tested, however Centrelink will not simply ‘swap you over’ you will need to lodge a separate claim for the CSHC.
As a pensioner I have received my mothers inheritance of real estate (her Home) will I still be able to receive the age pension until such time that I would sell the property or would Centrelink classify it as an immediate asset
Hi Alex, thank you for reaching out! Centrelink will assess your late mother’s property as an asset as soon as it becomes yours. You should notify Centrelink of this as soon as possible via the submission of Mod R form to avoid any overpayments/debt to Centrelink.
I have used all the inheritance of $342 that I received 6 years ago bar $1000,00.
I am about to receive another inheritance of $370,000.
Will Centrelink use both amounts to calculate if I should receive the old age pension.
I used the money this way $5000,00 each for both my children, Christmas gifts, Birthday gifts, a brand new car worth $62,000, washer and dryer, refrigerator, 2 small reverse cycle aircon, 2 mattresses, one queen size bedroom furniture, 3 cruises and a deposit for another one in October 2023, a month holiday on a tropical island, a few small electrical appliances, large TV, small fridge, has our house gutters repainted, solar panels and so on.
Will Centrelink add both inheritances before they decide to cut my pension?
Hi Marie, thank you for seeking assistance! Centrelink assess your pension based on the total value of your income and assets. Therefore the amount of the inheritance you received is not what they will look at, it is how much you have left after expenses such as the home improvements you mentioned. Centrelink will also count the money you gifted to your children as an asset for 5 years. I recommend you provide Centrelink with updated statements for your bank and super accounts and then call them on 132 300 to explain the gifting and new car details.
My mother who is still with us wants to give me $50,000 out of her long term investment bank account.
I am 62 and on Jobseeker but am medically unfit and have been on medical certificates for 5 years. This money would help immensely but I don’t want Centrelink to take any or have to pay tax on it. Any advice please.
Hi Martin, sorry to hear you have been medically unfit for work! Your mother can gift you $50k and Centrelink will not take any of it however she will need to declare the gift to Centrelink and the impact is that although her assets have reduced, her pension will not necessarily go up. Learn more about how gifting works HERE.
Hi,
I just received a $14k inheritance. I am on a Disability Pension. I am wondering how this amount of money will affect my payments if at all?
Hi Jus, thank you for your comment! We do not specialise in Disability Pensions so we cannot say with confidence whether there will be an impact or not. Please call Centrelink’s Disability, Sickness and Carers line on 132 717.
my husband who is on a part aged pension will receive an inheritance from his mothers estate. I am still working, if he puts the inheritance into my super will it affect his pension
Hi Michelle, thank you for seeking our guidance! We’d love to help support you to understand your options and the pros/cons of each. It would be best to do so in a more confidential forum like our Understanding More About Super consultation. I will send you an email separate to this comment with further information.
If I receive an inheritance of $40,000.00 do I have to tell centerlink of this.
Hi Leonard, thank you for seeking our assistance! Yes you should let Centrelink know of this increase in your asset value specifically but we recommend using it as an opportunity to update all of your income/asset values to ensure Centrelink are paying you the correct amount of Age Pension.
Hi my father just past away and I will inherit about $225000, I am on an aged Pension, can I put the money towards new bathroom, kitchen, also flooring throughout my house, as they really need an update, by doing that will I lose my pension or part of it, also maybe car, but then that’s probably all the money gone.
Hi Yvonne, great question, you’re thinking on the right track! Your home that you live in, is an exempt asset for Centrelink purposes. Any money you then spend on your home is exempt, so if money arrives in your bank account and is spent on your home, it won’t be assessed as an asset by Centrelink (as it will then be a part of your exempt home). Buying a car is different, you would be replacing one asset (money in the bank) with another asset (a car).
Thank you Sharon, I’ll forget about buying a car,
Dear people – Great information here, thanks. I hope you can help me find clarity with this scenario:
I’m 63 and on jobseeker allowance but unfit to work. Living in an old (leaky/mouldy) caravan after losing my house in the financial crisis 11 years ago, my mother (91) wants to gift an advance on a small inheritance, to help me buy a better caravan or start a Tiny House build or small cabin. My father passed away last year and she herself is now going into an aged care home (overseas). My parents never owned their own house, but there’s a max to what she’s allowed to gift annually.
It’s not a lot ($13 – 25k) but will buying a caravan or the like be counted as asset by Centrelink…even though it’s the only roof over my head? What type of small dwelling would be an exempt asset? ?If it takes me some time to find the right dwelling and the sum sits in my bank account, would that be deemed an asset? And if my mother would gift regular small amounts would that be exempt income?
Hi Mx Ir, thank you for the compliment on our article! For your situation it would be best to call Centrelink to confirm how they will assess you as our expertise is in the Age Pension/Commonwealth Seniors Health Card not Job Seeker. It may be assessed the same but we’d hate to give you incorrect information so best to go to the source.
Thanks Steven. I find that when contacting centrelink you get a different answer every time, so I hesitate to rely on their information.
Do you know of any organisation that might have real life experience and be able to answer my questions?
Hi Ir, thanks for the reply. You may wish to call and ask to speak with one of their Financial Information Support officers, you should be able to get a specialist who is across your enquiry and able to give you the correct information.
Hello,
I received an inheritance from my father who passed away last year. I am a first year uni student and am planning to apply for youth allowance. Will my bank account balance affect how much payment I receive on Centrelink?
Hi Jennifer, thanks for reaching out! We specialise in the Age Pension and Commonwealth Seniors Health Card but not Youth Allowance so I cannot be certain of how it is assessed. Being a Centrelink payment though I would imagine it is means tested and that yes your bank balances would impact how much you can receive.
Hi, my mum is on a pension (unsure which) and has an inheritance. With the rising cost of living she wants to help me by purchasing me a house to live in. I am on a disability pension. How will this affect either of us, mainly my mum? Both of us don’t want to do anything that could cause issues with her pension.
Hello
My husband is 65 and I’m 58 we are both currently working part time, we own our home and have no debt.
Hubby will be getting an inheritance soon between $300000 to $350000.
Hubby wants to stop working in Aug 2024 he will be 66 and ill be 59. We have between us $550000 in super.
My question is after spending some inheritance on home renovations, is it of benefit to put the rest of the money in my super and draw off his super, until he turns 67 and can get the pension. Thankyou…
Hi Tanya, that’s a great question you have and kudos to you for planning ahead! Often this is a good idea however everyone’s situation is unique so it would be best to book one of our consultations (CLICK HERE) so that we can go through the pros and cons with you to be sure.
I have 50% ownership of a company with my sons owning 25% each. The company has no assets, only a $200,000 Capital Gains Loss that it has been carrying forward for over 5 years. I would like to withdraw from the company, would my gift be considered as a $100,000 Capital Gains Loss and would I be able to use this to cancel a $100,000 Capital Gain gift of property for deeming purposes?
Hi Marion, great question! We can definitely talk with you about how Centrelink will assess you and what options you have via our consultation service. Please CLICK HERE to make a booking.