Ask Paul: We could lose our pensions because our brother died without a will


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Dear Paul,

Our brother recently died suddenly without a will. Verbal discussions were that his assets would be shared with 10 nephews and nieces.

Now, due to the lack of a will, four siblings are to share in the estate, which is worth about $500,000. 

ask paul clitheroe our brother just died without a will

We wish to comply with his wishes, but if the estate is distributed to us and then we pass it on to my brother's nephews and nieces, we believe that gifting provisions apply, which would impact on age pension payments for two sisters.

Is there a way for them (or all of us) to not receive an estate distribution and to pass it directly to nephews and nieces without impacting a pension? - Sue

Yow! This is not good news, Sue.

My commiserations to you and your siblings.

I am sure things are still too raw for me to nag too much, but could I ask all readers to please ensure they have a current will? I know we think "it won't happen to us" but as you are telling us, it does, or to someone we love.

The silver lining here is that as a family there has been discussion about how his estate should be split and it is really nice that you are working together to uphold his wishes and distribute it to his nieces and nephews. Good on you all. Let me tell you, this is not common, sadly.

Here, though, I need to duck out of the conversation. I am not a solicitor.

How your brother's assets will be treated as he dies "intestate" are just not in my field of expertise.

Sure, if it goes to all of you, your two pensioner sisters giving away anything above $10,000 a year will be deemed to be "deprivation". They could do $30,000 over five years and gradually pass it to their children.

But there is a simple solution here. I am sure you will have a solicitor dealing with this issue, so you and your siblings need to sit down with them and determine the best course of action.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Melanie Milne
June 3, 2023 2.05am

There is a document the executor or a solicitor can submit as part of Probate if all beneficiaries agree to distribute the estate differently. For example you could state that the beneficiary's amount of the estate be distributed instead to other relatives in place of the original beneficiaries. All beneficiaries must sign in agreement. Then the estate funds are considered an inheritance to named relatives and are not taxed nor increasing the assets of the original beneficiary.