If you have some connection with a Family Trust, Centrelink will attribute to your assets, for the purpose of assessing your entitlement for a pension, all the assets of that Trust. This is so, even if you have never had any ownership or entitlement to the assets of the Trust.
If the assets are substantial, then attributed to you will be all those assets and hence you will be unable to qualify for those benefits from Centrelink which require you to satisfy the assets test.
Recently, there was a case which challenged this fact. The case involved a couple who were in receipt of a pension which they lost because Centrelink attributed to them the value of the assets of a controlled private trust.
They appealed that decision. The matter was reviewed, firstly by the Social Security Appeals Tribunal which found in favour of the couple, secondly by the Administrative Appeals Tribunal which held that the couple were not eligible to receive the benefits they sought, and lastly by the Federal Court of Australia which upheld the original decision. Accordingly, the couple were able to retain their pensions.
While the issues raised by the case are somewhat technical, the practical effect of the pensioner’s argument was that, until the trustees exercised their discretion to make payment out of the trust fund to them, they had merely a right to invoke the equitable jurisdiction of a court to ensure that the trust was duly administered and that the trustees exercised their discretion properly.
The Commonwealth Government have subsequently amended the Social Security Act to remove the practical effect of the court decision. The amendment made states that an individual passes the control test if it could reasonably be expected that the trustee of the trust would make an application of the capital or the income of the trust to the individual if the individual could not meet his or her reasonable costs of living.
So, we are back to where we started. That is, if you have some connection with a family trust, Centrelink will attribute to your assets, for the purpose of assessing your entitlement for a pension, all the assets of the trust.
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