Page 1 - 13814-0517ab%20Insights-Investment%20Solutions%20mag_801734
P. 1

Summer Newsletter print
     Here’s the latest newsletter from Infocus. Please don’t hesitate to contact us if you have any questions in relation to
     these articles, or if we can help you with anything else.

     Family Trusts, Private Companies and Centrelink - what does it mean for
     your age pension?

                                           testamentary trusts and private companies  but remain as appointors of the trust (which,
                                           under both the Income and Assets Tests. The  while not providing legal control of the
                                           attribution rules have come into play to  assets, in the eyes of the DHS/DVA, still
                                           reduce or deny the prospect of Centrelink  provides control because the appointor can
                                           support for many people. Money tucked  remove the trustee).
                                           away in family trusts and private companies,
                                           even where it is for the benefit of children, or  It's important to get professional advice if you
                                           for asset protection purposes, has been  think this applies to you, contact us today!
                                           caught in the ‘attribution’ net.
                                           How does DHS/DVA assess my family
                                           Without diving into the technical detail, there
                                           are many ways of being associated with a
                                           private trust or company. You might be a
                                           beneficiary, or a trustee, or an appointor, or
                                           the original donor. You might have loaned
                                           funds to a family trust or company. You might
                                           be a shareholder or director or both.
     You’d be surprised at the number of people
     who are all excited about getting to age  There are two distinct tests that apply jointly
     pension age (65) and head down to     to determine the inclusion of assets and
     Centrelink and do all the paperwork, only to  income from a private company or trust.
     be told they will get a smaller pension, or  These are:
     no pension at all, because they are the  a Source Test; and
     trustee, appointor or beneficiary of a   a Control Test (Associate Rule).
     designated family trust or a director or
     shareholder of a designated private   Simply speaking, the Source Test relates to
     company.                              the source of funds introduced to a trust or
                                           private company, and the Control Test
     For whatever reason you have a family trust  relates to who is in control of the trust or
     or private company, in assessing your  private company – for instance, directors of
     application for the age pension (or the  the company or corporate trustee, individual
     disability support pension, newstart  trustees, appointors and
     allowance or other entitlements), the  beneficiaries/shareholders.
     Department of Human Services (DHS) and
     the Department of Veterans’ Affairs (DVA)  Some people might say, “Well, the money we
     will potentially ‘ping’ you for the assets and  invested in the trust is for the children, so we
     income of that trust or company which may  should be able to get the age pension. They
     reduce or negate your eligibility for the  are still too young to make good decisions so
     pension or allowance you are applying for.    we control it for them.” In this example, mum
                                           and dad are both the source of the original
     What are the Attribution Rules?
                                           funds and they continue to control the funds
     The rules now allow DHS and DVA to assess  (generally as trustees). Under the two tests,
     interests in family trusts,           they are caught. Some people put their
                                           children in as trustees
   1   2   3