Effect of a trust on payment
The effect of a trust on a person's payment under the income and assets tests depends on whether they:
- are a beneficiary of the trust's assets or income or both,
- have gifted assets or income to the trust,
- have loaned assets to the trust, or
- are a trustee only.
Trustee of trust's assets
A person who is a trustee only, derives no benefit from the trust; therefore, their pension entitlement is not affected. If a trustee receives salary or fees for administering the trust, however, the salary or fees are treated as income.
Gifted assets or income to a trust
Any outstanding loan balances are maintained as an asset. If assets have been gifted or sold to the trust, deprivation will need to be considered if adequate financial consideration has not been received.
Loaned assets to a trust
Assets may become part of a trust fund by being:
loaned to the trust, or
sold to the trust at market value, with payment of the proceeds deferred.
The amount owing is maintained as a financial asset
Beneficiary of a trust
Loans made by beneficiaries to a trust are financial investments and therefore subject to deeming.
A person who is a beneficiary may be entitled to the income and assets of the trust now or at some time in the future. The document that created the trust (for example will or trust deed) establishes the beneficiary's interest in the income and assets of the trust.