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Limit the Impact of inheritance on your Centrelink Age Pension

As financial planners, we assist clients through many stages of life.  Unfortunately, one of these stages is helping clients determine how best to invest an inheritance following the passing of a loved one.  A discussion often had is how the inheritance may impact their existing Age Pension entitlement.


Receiving an inheritance may or may not impact the Age Pension.  The impact it may have is dependent on one’s existing wealth and amount inherited.  The Age Pension payment may stay the same if one has minimal wealth and receives a small inheritance. It could also reduce the Age Pension, or in the worst case, cancel the Age Pension.  The pension will be cancelled if total assets exceed the upper threshold limit of $552,000 for a single homeowner or $830,000 for a couple homeowner.  Should the Age Pension be cancelled, the concession card will also be suspended.


Example: Sally and Bill have $500,000 in assets and receive a part Age Pension of $494pf each limited by the asset test.  Should they receive a $200,000 inheritance, they could expect their Age Pension to reduce by $300pf each to $194pf each.


When someone finds out their Centrelink entitlement is going to significantly reduce or cancel, they often consider ideas on how to delay receipt of the inheritance or reduce their assets.  A number of inappropriate strategies clients consider without seeking advice include:


  1. Gifting or transferring their entitlement to another person.


  1. Retaining money in the deceased estate for a prolonged period.


The above strategies generally have limited impact and do not work, as Centrelink have rules on the amount you can gift.  Amounts gifted above $10,000 per financial year and $30,000 over 5 financial years are considered as an asset and deemed to earn income for the next 5 years.  Transferring your entitlement to another person is also considered a gift in the eyes of Centrelink.


Once the estate proceeds are able to be paid, Centrelink will look to assess your entitlement as an asset.  Most people are not aware Centrelink can assess funds held in an estate and as such keeping funds in the estate for a prolonged period may not be a viable option.


Meanwhile, we often see clients postponing renovations on their house or their dream holiday as finances have previously been tight.  Depending on the size of their inheritance, taking that much needed holiday or completing work around the home, is potentially a good way to reduce assets and maximise, or retain, the Age Pension.


It is always best for clients to consider their options and the implications of their inheritance with the help of a specialist.  The advice of a financial planner can help minimise the chances of Centrelink issuing the dreaded request for repayment of overpaid entitlements.


We understand that discussing finances while grieving is often emotionally draining and encourage our clients to talk about future events and possible strategies.  We, as financial advisers, are only too happy to help take some of the stress away from a potentially challenging situation.


Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Before making any decisions on the basis of this communication, you should consider the appropriateness of its content having regard to your particular investment objectives, financial situation or individual needs.  Please seek personal advice from a Certified Financial Planner prior to acting on this information.
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  1. Leanne Wingad on January 25, 2018 at 3:34 pm

    Timely and interesting information.

  2. Robert Waddleton. on January 30, 2018 at 3:51 pm

    Nice to know where to go for help.

  3. Carol Liddiard on March 15, 2019 at 10:30 pm

    I was under the impression that an inheritance is exempt as it comes under the lump sum ( to never be repeated) “, but doesn’t appear to apply with Centrelink .. Have looked at Govt Human Resources web page that states this , but with Centrelink get different story. Very confused

    • The Muirfield Team on May 23, 2019 at 1:44 pm

      Hi Carol

      Any windfall you receive, whether it be an inheritance or otherwise, will be assessed by Centrelink when determining your eligibility for a benefit.

      There are structures where an inheritance can be placed to remove it from assessment.

      Please contact our office on 03 5224 2700 if you would like to discuss this further.

      • Garrick Fay on August 3, 2020 at 4:39 pm

        What sort or structures do you refer to ?

        • The Muirfield Team on August 5, 2020 at 2:01 pm

          Hi Garrick

          “Structures” is a very loose term and in this instance we are referring to Superannuation. A key component of superannuation is that it is not assessed by Centrelink until your reach Age Pension age provided you do not draw a regular pension.



    • Donna on November 11, 2019 at 6:27 pm

      Mum is getting an inheritance $80000, will this affect her disability pension

      • The Muirfield Team on November 19, 2019 at 8:49 pm

        Hi Donna

        The impact on your mothers pension will depend on her personal circumstances.

        Please call our office on 03 5224 2700 to discuss this further.

        All the best

        Courtney Robinson

    • Jenine Schrader on February 25, 2020 at 3:32 pm

      Hi Carol This is SO true!!!!!
      I’m glad I’m not the only person who gets totally different answers from Centrelink!
      I’m confused too!!!! Jenine.

  4. Robert Powell on June 18, 2019 at 9:24 am

    I am currently receiving a part pension and will be applying for a pension for my wife as well within the
    next month (July). Our current assets amount to $675,000 and my wife will soon receive an inheritance of
    $150,000. All of this will be used to pay down debt and to finish work on our home. Will this inheritance
    impact our pension?

    • The Muirfield Team on July 1, 2019 at 1:29 pm

      Hi Robert

      The principal home is not assessed by Centrelink therefore using your inheritance to pay off your home loan will generally be of benefit.

      There are other considerations to take into account. Please contact our office on 03 5224 2700 if you would like to discuss it further.

  5. kathy olechnowicz on August 19, 2019 at 9:50 am

    Hi thanks for the information. I have assets of about $80000 Super. I am on an aged pension and my partner is working part time.
    I own our house (and plan to pay off the $20000 mortgage left on it)
    I am about to inherit around $300000 fro my parents estate in UK.
    If my brother transfers this directly into my bank account what will happen to me regarding my pension?
    thanks kathy

    • The Muirfield Team on August 19, 2019 at 9:54 am

      Hi Kathy

      That’s quite a specific question. To give you an appropriate answer it would be worthwhile giving me a call at the office on 03 5224 4700.



  6. Anne Patterson on August 26, 2019 at 11:35 am

    I am receiving an aged pension & my assets are below the maximum allowance. My 95 yo mother wishes me to have a “gift” of $70,000 now & the remainder as an inheritance – approximately $100,000.

    How will this impact my pension please??


    • The Muirfield Team on August 28, 2019 at 5:03 pm

      Hi Anne

      Centrelink assessment is a complicated area, it would be worthwhile giving us a call on 03 5224 2700 to discuss your situation.



  7. Tania Prutey on September 5, 2019 at 1:05 pm

    Excuse me, can you please tell me howmany years your disability pension or aged pension will be affected by inheritance. IS it only so many years? Please help.

    • The Muirfield Team on September 5, 2019 at 1:44 pm

      Hi there

      The impact an inheritance will have on your disability or aged pension will depend on your personal circumstances and the structure you hold the money. For example holding your money in superannuation may produce a completely different outcome than having it in a bank account.

      Please call our office on 03 5224 2700 if you would like us to discuss your options in more details



  8. Michelle on September 7, 2019 at 1:19 pm

    Hi my father is in nursing home and is about to inherit roughly $110,000 from his half of house . Will receiving that amount affect his pension ??

    • The Muirfield Team on September 9, 2019 at 10:12 am

      Hi Michelle

      An inheritance could affect his Age Pension as well as his Aged Care fees. It’s very much a case by case basis.

      Please contact our office on 03 5224 2700 to discuss.



  9. S c Pontin on September 13, 2019 at 1:07 am

    Hi I have spent my inheritance on holidays. Will this mean I lose my disability pension?

    • The Muirfield Team on September 16, 2019 at 2:35 pm

      Hi there

      Not necessarily, if your money, inheritance or otherwise, is spent on living costs including holidays it will generally reduce your assessable income and assets. The impact on your disability pension will come down to how much you received and how much you spent on a holiday.

      Feel free to contact our office on 03 5224 2700 if you would like more information.



  10. Robert on October 8, 2019 at 3:50 pm

    Hi, My father just passed away and I will be inheriting half of his house. Could you please tell me if this will effect my aged pension straight away or is there a certain time when it will take effect.?
    Thank you .

    • The Muirfield Team on October 25, 2019 at 8:55 am

      Hi Robert

      Centrelink require you to update them within 14 days of your changed circumstances. In the case of receiving half of your fathers house, this 14 days starts from when the house is transferred into your name. Centrelink will require you to provide a valuation which is most easily done by providing a rates notice. Whether it impacts your Age Pension or not relates to your specific circumstances. For us to give you a more accurate assessment, please call our office on 03 5224 2700.

      All the best


  11. David Hyde on October 17, 2019 at 4:57 pm

    Hi, is paying down an a high equity loan (line of credit) seen the same as paying down a mortgage as far as an inheritance is concerned?

    • The Muirfield Team on October 25, 2019 at 9:01 am

      Hi David

      To answer your question i’ll start with giving you some context. Your principal place of residence is not assessed by Centrelink when determining your rate of payment. As a result, paying off your mortgage, including line of credit secured against your home, can help reducing your assessable assets. To the contrary, the value of an investment property is assessed by Centrelink, net of any loan. By using your inheritance to reduce your investment loan will only increase the net assessable value of your investment property. It’s a nil sum game.

      I hope I have made sense here, if not, please call our office on 03 5224 2700 and I can provide more detail over the phone.

      All the best


  12. Natalie on October 28, 2019 at 11:42 pm

    My mother passed away and I will inherit her home. My husband and I own our home home and I am on a disability pension and my husband is my carer. We will eventually sell our home to renovate my mother’s home to live in but this will take time to get plans through council etc. Will I lose my disability pension and my husband, The carers pension once my mother’s home is in my name and if so, will there be any problems re applying for both pensions. My disability is permanent and I have had this pension for the past 20 years.

    • The Muirfield Team on October 31, 2019 at 8:52 am

      Hi Natalie

      The inheritance of a second home that is not your Principal Place of Residence can impact your Centrelink entitlement, however it may not result in the loss of your Disability Support Pension. Depending on your circumstances, there could be strategies available to you that would result in your current entitlement being retained once you have renovated and moved into your Mothers home.

      Please contact our office on 03 5224 2700 to discuss in more detail.

      Kind Regards


  13. Cynthia Stevens on January 21, 2020 at 3:28 pm

    I have just rec’d an inheritance of 300,00 from my mother … my husband has cancer and is undergoing chemo and receives a part pension of $464 a fortnight.

    I work an earn $1500 per month.

    Will this inheritance affect my husband’s fortnightly pension payment and most importantly will the funds affect his other benefits ie medical care and prescriptions. We own our own house and car and have super of roughly 300,00 and savings of just over 100,00.

    • The Muirfield Team on January 31, 2020 at 10:48 am

      Hi Cynthia

      This is quite a specific question therefore I’d be happy to answer it over the phone when you have a spare minute.

      Our number is 03 5224 2700.

      All the best

      Courtney Robinson

  14. Anna on February 1, 2020 at 5:11 pm

    Hi There,
    My mum is about to inherit approx 500k. She owns her house. If she were to plan to build another house on the same block, and puts this money directly into this, would it effect her pension? The new build would become her Principle place of residence, and her current home would likely be demolished.

    • The Muirfield Team on February 4, 2020 at 5:16 pm

      Hi Anna

      Thanks for the question. Initially, you mother would need to update Centrelink following the receipt of an inheritance. Assuming there is a delay in spending the money on a new house, her pension may be impacted in the short term. It is important to note that you may only have one principal home and the fact she is building a new home on the same block comes with its complexities.

      Please call our office on 03 5224 2700 to discuss your options in more detail.

      All the best

      Courtney Robinson

  15. Cilla Smith on February 16, 2020 at 5:19 pm

    My husband is receiving the Age Pension, however I am not of pension age for five years. If I was to put his inheritance (when received) into my super, would Centrelink class that as a gift?


    • The Muirfield Team on February 17, 2020 at 2:36 pm

      Good afternoon Priscilla

      Thanks for your comment.

      Transferring money between a couple is not considered a gift therefore it is possible to add the money into the younger spouse’s superannuation to protect it from Centrelink.

      Before implementing any such strategy we recommend you consider the rules around superannuation contributions and access.

      Feel free to contact our office on 03 5224 2700 to discuss this in more detail


      Courtney Robinson

  16. David on February 18, 2020 at 7:54 am

    We are a couple receiving a part page pension and wish to reduce our asset value by buying a unit ($250K) for our daughter as an early inheritance and written as such into our will. Can I do this and how will it affect our Aged Pension

    • The Muirfield Team on February 19, 2020 at 10:55 am

      Hi David

      Buying a house for your daughter will be considered a gift regardless of the fact that you consider it an early inheritance.

      Gifts above $10,000 pa (and $30,000 in any 5 year period) are what Centrelink call a “deprived asset”. Deprived assets are assessed by Centrelink as though you still own them for 5 years after the gift was made.

      In effect, you will not be able to significantly reduce your Age Pension via this strategy.

      We’d be happy to discuss this in more detail or any other strategies you have in mind. Simply call our office on 03 5224 2700

      All the best

      Courtney Robinson

  17. Nikki on May 28, 2020 at 11:00 pm

    I received an inheritance mid last year but never been on centrelink. I used the money to now offset our homeloan as opposed to paying it out in case i need it later. I applied and started FTa&b late last year and applied for jobseeker and has been approved in February but didnt state the offset account as no question related to the money. Do i need call and talk to someone or go in to make sure its ok?

    • The Muirfield Team on June 9, 2020 at 1:30 pm

      Hi Nikki

      If the money in the account is offsetting your principal home, then no, you do not need to advise Centrelink. The home and related loan are not assessed by Centrelink.

      I trust this answers your question.

      All the best

  18. Erin on June 2, 2020 at 2:03 pm

    I am on a DSP and will be inheriting a lump sum slightly greater than the assets test. If I inherit cash exceeding the assets test, will my DSP be cancelled or suspended? I will be looking to invest the money in my first home.

    • The Muirfield Team on June 9, 2020 at 4:06 pm

      Hi Erin

      If you receive the money and use it to pay off an existing home loan within 14 days of receipt, you still need to update Centrelink though it shouldn’t impact your benefit. However, if the money remains in your bank for a longer period your pension may be cancelled.

      I trust this answers your questions.

  19. Charlie on June 17, 2020 at 9:39 pm

    I’m a 60 yo carer for my wife that is on DSP and I am about to receive an inheritance of approximately $200K. I own my home and have very little assets. I would like know if this inheritance will affect my careers or my wife’s benefits in any way?

    • The Muirfield Team on June 18, 2020 at 7:54 am

      Hi Charlie

      Unfortunately we will need a lot more information to be able to determine if your benefit will be affected. Centrelink use an income and asset test to determine your rate of payment. For a couple which own their home, your rate of payment will reduce from the maximum once your assets exceed $394,500. Your payment will stop if your assets exceed $869,500. Your home and superannuation (provided you are under Age Pension age) are not assessed. There is also an income test to consider.

      I suggest you call our office on 03 5224 2700. Happy to help you over the phone.

      All the best


  20. Leanne coutman on September 2, 2020 at 3:06 pm

    Hi, I will be receiving an inheritance and I am on job seeker and my husband is on an age pension we don’t own our own home we are renters. I was told years ago that you can use inheritance money to buy your own home is this correct?

    • The Muirfield Team on September 3, 2020 at 8:43 am

      Hi Leanne

      Thanks for your question.

      It is entirely possible to purchase a home with your inheritance. As a renter Centrelink will assess your eligibility for a payment using the non-homeowner asset test. If you purchase a home to live in you will become a homeowner in Centrelinks eyes. As a result Centrelink will apply a lower asset threshold when determining your eligibility for a payment. However it is important to note the principal home is not assessed by Centelink.

      I trust this answers your question

      All the best


  21. Antoinette on September 20, 2020 at 3:41 pm

    Hi .My husband is on the aged pension and I am his carer. We own our home and I will be receiving about 1million dollars in inheritence. I am scared this is not enough to survive these days especially if we lose the healthcard as hubby has a lot of medications.. Can I open a trust or put the money elsewhere so we still can keep some pension?

    • The Muirfield Team on September 21, 2020 at 10:43 am

      Hi Antoinette

      As a general rule Centrelink have “look through” provisions for trusts. That means they look at who added the money to the trust, who the trustee is and who the beneficiary is when determining if and how the money in a trust is assessed.

      For me to fully answer your question I’d need to know a little more about your situation. I would happily have a chat on the phone if you call our office on 03 5224 2700.

      Thanks for your question.

      Courtney Robinson

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