Last amended: 2 May 2013
Deprivation related to deceased estates
Deprivation provisions apply to a pensioner's interest in a deceased estate if the pensioner:
- waives their right to their interest in the deceased estate,
- directs the executor of the will to distribute their interest in the deceased estate to a third party, or
- gives their interest in the deceased estate to a third party after the estate has been finalised.
The provisions apply even if:
- the pensioner is the executor of the estate, or
- the deceased died without a will.
Where changes to the distribution of assets from a deceased estate result from a binding Court order, deprivation does not arise. In this situation, changes to the distribution of asset value cannot be held to be the direct responsibility of the affected pensioner (including where the pensioner is the executor). A course of conduct leading to a diminishing of asset value, required to substantiate a finding of deprivation, does not exist.
Determining the date of disposal
The date of disposal is determined by how a pensioner disposed of their interest in the deceased estate, as shown in the following table.
If a pensioner... | then the date of disposal is the later of the date... |
waives their right to their interest in the deceased estate, |
|
instructs the executor of the will to distribute their interest in the deceased estate to a third party, |
|
gives their interest in the deceased estate to a third party, |
|
Amount of disposition held for separated couples
The amount of disposition held against members of a couple who separate is affected by:
- the original ownership of the asset, and
- whether the reason for the separation was:
- relationship breakdown, or
- the death of one of the partners.
Effect of relationship breakdown on disposition amounts
Effect of relationship breakdown on disposition of income
Section 48C(2) VEA
Effect of relationship breakdown on disposition of assets
Section 52H(3) VEA
Section 52JC(3) VEA
Section 52JD(3) VEA
When a person transfers assets as a result of the court-ordered property settlement following a relationship breakdown, it is NOT regarded as deprivation. Satisfying the demands of a court-ordered property settlement is regarded as adequate consideration for the asset.
When a person gives away assets as part of a private settlement, the circumstances need to be compared to the reasonable splitting of marital assets that might be ordered by the Family Court. Any private property settlement which departs from the expected court-ordered settlement would reasonably be regarded as deprivation. Where the total assets are equitably split, with the home going to one partner and other assets (e.g. investments, superannuation, motor vehicles) going to the other partner, the gifting of the share in the home is not considered to be deprivation, as adequate consideration has been received.
The following table explains the change in disposition amounts for couples who have permanently separated because of a relationship breakdown.
If the disposed of asset or income was owned... | the amount of disposition... |
jointly, | does not change for either partner. 50% of the value of the asset or income continues to be held against each person. |
by one partner, | becomes fully held against the partner who disposed of the assets or income. |
Effect of the death of a partner on disposition amounts
Effect of the death of a partner on disposition of income
Section 48C(3) VEA
Effect of the death of a partner on disposition of assets
Section 52GA(4) VEA
HOTWORD "xlib-LEGIS-section 52GA(5)">Section 52GA(5) VEA
Section 52H(4) VEA
Section 52H(5) VEA
Section 52JC(4) VEA
Section 52JC(5) VEA
Section 52JD(4) VEA
Section 52JD(5) VEA
The following table explains the change in disposition amounts for couples when one partner has died.
If the asset or income was owned... | the amount of disposition held against the surviving partner... |
jointly, | does not change. The amount held against the deceased partner is not transferred to the surviving partner. |
by the deceased partner, | is reduced to zero. The surviving partner did not dispose of the asset or income. |
by the surviving partner, | increases by the relevant disposal amount held against the deceased partner. The surviving partner disposed of the asset or income and so all of the value that was formally shared between the two partners is held against the surviving pensioner. |
The above rules apply to amounts disposed of on or after 1 July 2002 that are part of the amount accumulating towards the $30,000 limit over a 5-year rolling period.