9 ways to legally hide money from Centrelink Age Pension #HideMoneyFromCentrelink - YouTube

In Australia Age Pension benefit is the ultimate income stream.

It is reliable, secure, if your personal assets are  correctly structured and well looked after,

Age Pension can be virtually a guaranteed income stream for you.

But sometimes it is easier said than done, as you might not be eligible for Age Pension under Income Test or under Assets Test. 

It all depends on your accessible assets, and in what form your current income is being paid to you.  

Today's chat is all about how to LEGALLY HIDE YOUR ASSETS from Centrelink, 

if based on assessment you know in advance that you just simply have too much money. That's not  a bad problem to have.

But first I invite you to watch my video "Age Pension explained", 

providing you with all basic details of how  Centrelink office assesses your financial situation,

so before you apply or update your Age Pension details, you should really understand the rules and this is what this video will explain in details.

The second video I encourage you to watch  is "The truth about Assets test".

You might be very surprised what you hear in this video, it is a real eye opener and most certainly it will help you improve your understanding of Assets Test rules.

But who am I to tell you all of this? My name is Katherine from About Retirement.

I'm Certified Financial Planner and I love talking about retirement.

Retirement planning is so dear to my heart. I love assisting people in setting up their savings to create income certainty for retirement.

So you know you will never run out of money, never run out of income and assets when you really need.  

So here you are getting ready for your exciting day, when you can finally say:

"I can retire now and where is my Age Pension?" and then to your horror you find out you have too much savings!

My very first recommendation is: organize your money well before your first visit to Centrelink office,  

or completing your application online. Prepare your assets in advance so you know your  entitlement,

before Centrelink even comes back to you with the answer.

It is so much easier to deal with Centrelink when you know the application is final,

and you don't have to go through changes, updates, fixing mistakes, reshuffling money.

Believe me I've gone through this  experience many times it's not pleasant.

So what can you do, if you've calculated that you actually have too much savings, but your goal really is to get at least Part Pension,  

if for no other reason, is to have access to Health  Care Card with all its benefits and discounts? 

Obviously the easiest way to reduce your assets and your savings under Assets Test is just simply spend your money,

but spending it for the sake of getting rid of money is pretty silly,

not to mention that Centrelink is checking your last five-year transaction history.  

If you are to spend your money, do it in a way that it will provide you with some kind of long-term benefit,

and helps with Age Pension eligibility at the same time.

So now let's discuss "9 ways how you can legally hide your  assets from Centrelink" to improve your Age Pension position.

1. Gifting  

You can give away a maximum of $10,000in one financial year,  

and up to $30,000 within a period of five financial years.

But what exactly is gifting for Centrelink purpose?

If you sell an investment or you transfer an income or an asset to another person or another party and you receive less on nothing in return,

and you have done it within the limits that I've just explained. it is gifting.

If you exceeded the limit, this is regarded as asset deprivation and the balance above the allowable limit will be treated as  

deprived asset and will be counted under Income  and Assets Test for the period of 5 years,

as if you continue holding that asset.

So here are a couple of examples of gifting:

You gave your daughter $10,000 to help her with home renovation.

$10,000 is within the dollar limit and it is with a time limit as well, so it is gifting.

If you sold your car to your niece for example, for $5,000    while the market value of the car is $20,000,

then it is estimated that you have given away $15,000 of your assets.

Again, it is within limits, therefore it will be treated as a gift.

Giving away a car of $50,000 value for no payment back to you is deprivation of assets and will require a period of five years  

to disappear from your assets and to be no longer counted under Assets Test.

2. Home exemption

As I explained in my previous video: "Age Pension explained" home is just about the only asset that regardless of its value

is fully exempt under Assets Test

up to the first two hectares of land it is on.

Therefore if you really have lots of assets, and you really want the part Age Pension, you can buy yourself a new bigger better more expensive home. 

That is one of the easiest solutions, but whether it is the best solution for you,

for your overall  retirement income needs is another matter altogether.

I would recommend reviewing all other solutions first, before jumping into such an expensive exercise as

selling your existing home and buying a new one.

If you are renting and you have lots in super or in another form of investment,

then it makes more sense to buy a home. But again it needs to be calculated based on your personal situation

and your personal income needs as well as your future financial plans.

So before you jump into buying a new home, get a specialized advice, make sure you are not rushing into anything,

but actually make an informed decision for your future retirement needs.

3. Renovate your home

As mentioned before, your home is the only real exempt asset so if you have spare cash you can invest some back into your existing home.

Any money spent to improve your home or repair it, 

it will become part of its value therefore exempt for Centrelink tests.

4. Repay debt against exempt asset

The shocking statistic is that in 2019 over 37% of retirees aged between 65 and 74 and 28% of retirees above the age of 74,

still had a mortgage against a family home.

And those numbers are only growing.

If you are one of those retirees and you have savings on the site, you should really consider repaying your mortgage first.

The reason is that your mortgage continues to charge you interest which is your loss, and you have to meet ongoing repayments,

and at the same time your savings attract deeming rates or  some other form of calculations under Income Test, 

might be subject to Assets Test, therefore your age  pension benefit could be reduced.

This is a double whammy loss for you. If this is you please get advice.

5. Prepay your expenses

This is a strategy used by many people at the end of each financial year to prepay  

some of their expenses for the upcoming year  and claiming tax deduction in the current year.  

You can do exactly the same with your expenses  and prepay for example:

all your general insurance premiums: home, car, caravan, boats.

Your private health insurance.

Prepaying the whole annual premium should also attract a solid discount so it should be a double benefit for you.

Prepay your holidays.  Plan your holidays in advance and prepay them.  

Not only you might negotiate a very good discount  but money will no longer be in your bank account  

therefore it won't be counted for Age Pension asset test.

Just think outside the box.

6 Funeral bonds or prepayment of your funeral expenses

Well we all know that death and taxes are the only guaranteed things in life,

so it only makes sense to either prepare your funeral or to invest into a funeral bond.

You can invest up to $13,500 per person or as a couple into a funeral bond. You can have a bond each as well, virtually doubling the value   

of the exempt asset up to $27,000. But if you invest above the limit of $13,500

into a joint bond it will not be exempt.

In contrast there is no limit to prepay for funeral expenses. For those expenses to qualify there must be contract

between you and the funeral director, statement that the service has been fully paid for, and the payment is not refundable.

You really must remember that both methods will prevent you from having access to this money ever in the future.

Both are non-refundable, so get advice to confirm  that this is really the best option for you.

7. Contribute to a younger spouse super

If there is an age difference between partners,  you are arriving at the Age Pension age while  

your partner is several years away, one of the best strategies is to hide money in a younger spouse super.

Until that younger partner becomes eligible to apply for Age  Pension based on his or her age,

the balance of the superannuation will be fully exempt from any test.

It is best to plan this years in advance, but unfortunately that very rarely happens and often  

I see clients just before they're ready to apply for Age Pension asking for help how it can be done.

There are still ways to reshuffle superannuation money between partners, but you need to know  

superannuation rules of access to funds from super, contributing back to super, you need to know limits

to make sure you don't bridge them, which can become a little bit complicated.   

You need to consider possible costs in such a change, also money will return to a 15% superannuation tax environment,

as opposed to being in tax-free pension environment and another major issue to consider is

that money would go back to being "preserved" within superannuation fund,

and the only way to have access to this money again is when  the younger spouse meets conditions of release.

So this strategy is great as long as you take appropriate precautionary steps  

to have sufficient emergency funds and  still benefit from maximized Age Pension  

8. Purchase a specific type of annuity

This is another fantastic idea to legally hide your assets from Centrelink, but in order to know what type of investment would work wonders for  

improving your Age Pension eligibility, you need to know which test affects you the most.  

Is it an Income Test or is it an Assets Test?

If unsure, just watch this previously mentioned video: "Age Pension explained" If still unsure just contact me and we can have a conversation

When you know what problem you're dealing with then  you can apply the correct measures

to maximise the benefit and legally reduce either your income or your assets

A lifetime annuity may immediately increase your Age Pension benefit because only a portion of your investment is counted under the Assets Test.

Any benefit will depend on whether you are assessed under Income or under Asset Test.

9. Special disability trust

This is a very special type of trust for families to place money for the long term care and accommodation needs

of a person with a severe disability, and funds could be exempt from Asset Tests subject to specific rules and limits.

This topic is extremely personal and not really for general discussion, if you require information or assistance please contact me directly.

All my details are listed in the description below this video.

This is what I've prepared for you for today.

I do hope this information will assist you to get the most out of the Age Pension system.

If you found this video valuable and informative, please give it THUMBS UP and SUBSCRIBE to my channel not to miss my next video.

And now I would like to invite you to watch the  previously mentioned videos,

all you need to know about Age Pension and how Income and Assets Tests can affect your entitlement.

The second series of videos is all about superannuation and  how to utilize super to get the most out of it  

and to create a secure income stream for your anticipated retirement.

I'll talk to you soon, bye.