How an inheritance will affect your pension
If you’ve received an inheritance and are on the age pension it’s important to be aware of the impact it can have on your entitlements. Depending on the nature of this lump sum, you might be required by the Department of Human Services to fill numerous reporting requirements, and if you fail to do so there are real consequences.
What do I have to do?
The Department of Human Services brings an inheritance under the lump sum banner, which can count in your income test and may affect your payment.
“You need to tell us within 14 days after you get a lump sum. If you don’t, we may overpay you. If this happens you’ll have to pay us back,” the Department website says.
“You must tell us about any lump sum you get, even if you think it’s exempt from the income test. You need to also tell us of any changes to your assets.”
However, with inheritances it gets more complicated
Inheritances are also included under the lump sums that are excluded from the income test, as a one-off payment that is likely unable to be repeated.
But the nature of how you spend the inheritance, brings with it some complications. For example, if you invest the money and it’s deemed to earn interest, this will be assessed under the income test. So to, if you use the money to purchase an asset.
What are my options?
Overall, as is often the case with complicated money matters like this, the devil is in the detail. In the end of the day, it’s generally your best bet to consult an independent financial advisor. They can help advise you with the best way to spend or invest your incoming money, so you don’t lose your entitlements in the process of doing so.
Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice.