Losing a spouse brings significant personal and practical changes. Among the many matters you may need to manage, your Centrelink or Department of Veterans’ Affairs (DVA) entitlements may also change.
One surprising aspect is that your pension may change even if your overall financial position has not increased significantly.
This can happen because Centrelink or DVA will generally assess you as a single person rather than as a member of a couple.
Moving from a couple to a single assessment
Centrelink and DVA use different rates and means-test thresholds for single people and couples.
Following the death of a spouse, Centrelink or DVA may move the surviving partner from a couple assessment to a single assessment.
The maximum single pension rate is higher than the rate paid to each individual member of a couple. However, the income and asset thresholds also change.
As a result, it is important to look beyond the headline pension rate.
What happens to jointly owned assets?
A surviving spouse may also become the sole owner of assets that the couple previously owned together.
These might include bank accounts, investments, property or other financial assets.
These assets may have already formed part of the couple’s overall financial position. However, Centrelink or DVA may assess them differently when one person becomes the sole owner.
Depending on the circumstances, this change may affect the surviving spouse’s pension.
What if you also receive an inheritance?
The situation can become more complex if the surviving spouse inherits additional assets from their partner’s estate.
Several factors will determine the impact. These include the type of assets, how the couple owned them and the surviving spouse’s existing financial circumstances. What happens to the inherited assets may also make a difference.
The financial impact may extend beyond the Age Pension. If you receive aged care services, changes to your income and assets may also affect your aged care fees.
Review your financial position after a spouse dies
Financial matters may understandably not be the first priority following the death of a partner.
However, when the time is appropriate, reviewing your financial position can help you identify changes to your entitlements. It can also help ensure your financial arrangements continue to suit your needs.
Your review may include Centrelink or DVA entitlements, ownership of assets, cash flow and investments. Where relevant, you may also need to consider aged care costs.
Has your financial situation changed following the loss of a spouse?
You do not have to work through the financial implications alone. We can help you understand how changes to your assets and assessment status may affect your financial position and entitlements.
Contact Forman Financial Services today or book a meeting to discuss your circumstances here.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.