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Ask Paul: Will I lose my disability pension if I inherit $100k?
By Paul Clitheroe Published on December 6, 2023
Dear Paul,
I'm currently on a disability pension and live in public housing in Queensland.
My mother recently died and I may inherit around $100,000 (unsure of the amount, as awaiting probate). I don't work and have no superannuation.
My assets, including my car, furniture, etc, would be worth about $10,000.
I'm terrified that I'll not only lose the disability pension but will get kicked out of public housing.
I do intend to prepay my and my son's funeral, cremation plots and plaques. What do you suggest, please, so I keep my housing and pension?
I understand your concern here, Beverley. I need you to call your Queensland Housing Service Centre to discuss your personal situation, but reviewing the Queensland public housing information, I do not think you will be about to be ejected from your home or lose your pension.
Let's assume you do get $100,000, with your current $10,000 in assets. Looking at this logically, while it will be a wonderful help to you, it will not put you in a position to buy your own home, and the returns from investing it of around $5000 a year hardly make private rental possible.
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In Queensland, eligibility for public housing is that you earn under $609 a week and that you don't own or part-own a property. A single-person household in public housing can have $116,375 in assets - you would be below this amount.
With your disability pension, I also do not see an issue. If you invested the $100,000 in a term deposit at, say, 5%, that would give you a bit under $100 a week.
But you are allowed to earn up to $102 a week before you lose a dollar of pension. When it comes to assets, you do not lose a dollar of pension until you have above $543,750.
If you do receive $100,000, clearly for both social housing and your pension, your circumstances will have changed, so you should advise both.
But my read of the relevant rules indicates that it will not impact either your home or your pension.
What you should do is to ring both your Housing Service Centre and Services Australia, or pop into their offices and check, but I am quite confident that the amount you are likely to receive will make your life better but not impact your home or pension.
Finally, be careful with prepaid funeral plans. Some of them can be a dreadful ripoff.
Ensure you deal with a reputable funeral provider and do check the fine print. All too often these prepaid plans do not deliver the funeral you were expecting. Take care!
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4 responses to “Ask Paul: Will I lose my disability pension if I inherit $100k?”
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You
say
"With
your
disability
pension,
I
also
do
not
see
an
issue.
If
you
invested
the
$100,000
in
a
term
deposit
at,
say,
5%,
that
would
give
you
a
bit
under
$100
a
week.
But
you
are
allowed
to
earn
up
to
$102
a
week
before
you
lose
a
dollar
of
pension.
When
it
comes
to
assets,
you
do
not
lose
a
dollar
of
pension
until
you
have
above
$543,750."
You
really
need
to
understand
'deeming'
before
making
assertions
such
as
these.
Income
from
$100k
invested
isn't
counted,
it's
the
deemed
income
from
an
asset.
This
is
4.5%,
although
much
less
for
the
first
$50k
of
all
assets.
In
this
case
the
deemed
income
is
way
below
the
threshold,
but
$540k
is
far
above
the
threshold.
You
wouldn't
lose
any
pension
on
the
asset
test,
but
definitely
would
on
the
income
test,
as
4.5%
of
$540k
is
way
over
the
allowance.
So
you
definitely
would
lose
some
pension
with
$540k,
although
not
with
$110k.
https://www.servicesaustralia.gov.au/deeming?context=22526
Dear John (😆),YOU have to "really understand 'deeming' before making assertions such as these."Centrelink, deeming rates (as per Centrelink website) are: "If you're single -The first $60,400 of your financial assets has the deemed rate of 0.25% applied. Anything over $60,400 is deemed to earn 2.25%."If you're a coupe the $60,400 is replaced by $100,200 BUT the deemed rate for theses amounts is still 2.25%, NOT 4.5% as you have stated. This is a huge difference! The pension adjustment calculations per the Centrelink income test also involves a 50% reduction rate of income, thereby meaning that $540K financial assets (investment income & 'garage sale price' of owned Assets) for a non homeowner does NOT result in you being "way over the allowance".
Deeming rates were halved over Covid. You would be foolish to rely on that not reverting to the previous v rates of 0.5% and 4.5% respectively. Indeed, given the current financial climate, it would be prudent to expect an increase from these rates.It pays to understand the history and context of such things.
My niece, who is on a disability pension and lives in public housing in Qld. has inherited 50% of her mother's estate. It looks like this could be about $600, 000.00. She does not want to lose her public housing. How can she avoid this?My niece has a daughter, who is in grade three; however, due to my niece's disability she is unable to bring her daughter up on her own and therefore her daughter lives with a family friend who has paid for the child's education at a high-end private school, as well as most other costs involved with rearing a child. Instead of placing money from the inheritance in a trust for her daughter, which I am assuming would be seen as a gift, is it possible that she pays the friend, taking care of her daughter, the amount of money spent on education etc. as a debt, thus reducing the amount of money she has from her inheritance. Likewise could she pay for her daughter's education in advance (if the school is in agreement) to help reduce her assets so she does not lose her public housing. Any suggestions on how best to not let her inheritance interfere with her eligibility for her public housing and hopefully not reduce her disability pension would be much appreciated.My niece's disability would make it very difficult to manage owning a home, while at the same time it would be extremely difficult to purchase a home anywhere near where her daughter lives, with the amount she may inherit. Her mental health has improved significantly since she has been living where she is presently, and it is more than likely that to move from the area would be detrimental to her state of mind.