Separated couple living under the same roof and Age Pension


Separated couple living under the same roof and Age Pension

Today I will speak about widely requested topic of the assessment of people who are permanently separated but who live together under the one roof.

In most situations a couple who is separated, but continue living under the same roof, does so mainly for financial reasons, and unfortunately often that could be a long-term arrangement.

So, if you are in this situation, not only you have to figure out how to organise your home and your day to day living arrangement to be able to live under the same roof with your ex, but additionally you have to also deal with your finances that once used to be “together money” and now, each partner is responsible for their share only. And to make things even more complex, you have to deal with the Centrelink office.

It is usually not as simple as advising Centrelink that you have become single. Centrelink will perform their due diligence and you have to prove that you are indeed separated and not just after more money from the government.

After all the payment a single pensioner receives is much greater that the payment made to each partner of a couple, so Centrelink wants to make sure you are not trying to take advantage of the system, and believe me, many people try.

If you are pass the stage of separation and now are moving a step further to proceed with the divorce, this is the article to read: “How to prepare for divorce in your 50s or 60s – Grey divorces”.

But today we are talking about “Separated couple living under the same roof and what to pay attention to in retirement and when dealing with Centrelink”

Definition of a member of a couple

  • A ‘couple’ means two persons who are legally married or have been in a registered relationship for at least 12 months or in a de facto relationship.
  • A ‘member of a couple’ means any person who is a member of a family unit that includes a couple

If you are no longer within the definition, you would be regarded as separated, or single.

Recommended steps for you to follow:

  1. Notify Centrelink of your relationship change to a single person, while continuing to live under the same roof with your ex-partner
  2. Provide evidence that you are separated.
  3. Each person from a couple will need to explain why you continue living together and why you share the residence.
  4. You will need to prove to Centrelink how your family home has been divided to accommodate for both of you, and proving being separated
  5. Just because Centrelink accepted your separation and living together, does not mean it is forever. This decision is most certainly subject to ongoing reviews as see fit by the Centrelink office.

There are six factors that Centrelink takes into account when assessing you in this situation:

1. Financial:

Centrelink will check all your financial arrangement as a single person:

  • splitting bills
  • separating bank accounts to own name only
  • transferring assets from one person to another as part of financial settlement
  • closing joint bank accounts
  • all other actions you take to prove separation of financial assets

There are other aspects of marriage separation that not only will prove that your separation is genuine, but also logically you should complete those steps for the security of your overall financial position:

  • Advice ATO of your new status, therefore when completing your tax return, you no longer are providing details of income of your partner
  • update your Will to ensure you change your beneficiary, from your ex-partner to other important people in your life, if this is what you wish to do.
  • update the Death benefit nomination within your super fund – many people forget to do this, and your super balance might end up with you ex, if you have done nothing about it.
  • if you have any life insurance, also change the beneficiary of your policy

As you can see, there are number of steps for you to follow to ensure you are in the best financial position from the finance and Centrelink standpoint.

But Centrelink will not stop there.

Often your personal statements might not be enough for the Centrelink office to be convinced that you are genuinely separated, they will seek confirmation of a third party outside of your friends and family. This is to establish if the separation is permanent or just temporary.

By third party I mean people such as:

  • your solicitor who assisted you in the property settlement
  • your accountant, who would be updating all the personal information that is required on your Tax Return
  • your financial planner – who would participate with advice or transactions to separate all assets between partners.

If you cannot provide names of any of those independent sources, then often a government social worker might need to need to be involved to provide the evidence required.

2. Nature of Household

You might be surprised, but Centrelink might employ government officers to investigate if you have made you adjustments and changes within your home that you share with your ex-partner, proving that you have made an afford to physically remove yourself from your ex-partner to live independently.

They will obviously take into consideration share spaces, such as your bathroom or kitchen, but will be looking for evidence of for example a roster agreement for certain activities, separate shopping, home maintenance, creating a new bathroom etc.

3. Responsibility for children

That in most cases does not apply to people preparing for retirement or those who are retired and on Age Pension.

4. Social Aspect of the relationship 

Centrelink will check:

-  Are your friends aware of your separation?

– Do you go on your holidays separately?

– Has one person developed a relationship with a new person?

– Are you visiting your children separately?

5. Presence of a sexual relationship 

This is most likely self-explanatory, if you are having still a sexual relationship with your ex-partner, he or she is not your ex, therefore Centrelink will continue considering you as a couple.

6. Nature of the commitment

Centrelink will try to establish if there are any commitments you still have towards each other and how have you tried to distance yourself from your ex-partner:

  • withdrawal of intimacy and support
  • do you still have any joint plans for the future
  • how do you share information and communicate with one another
  • has any partner tried to proceed with the divorce, rather than just stay separated?

It is a very complicated process and not an easy one to go through, as you might feel almost an innovation of your privacy is taking place when dealing with Centrelink, but the more open, honest you are, the more organised and following all the above listed steps, the faster this assessment will be over.

If your separation is permanent, my recommendation is to finalise it with a divorce and then you have no issues with Centrelink and you can start your life as an independent free person.

One last piece of advice is, that if you are looking at Age Pension, as you know, limits for a couple and for singles are very different. Therefore, if you find yourself in the situation of missing out on Age Pension that has reduced or has been cut out altogether due to your single status, please consider asking for a good financial and retirement planning advice from an experienced advisor. You don’t know the outcome that could be achieved unless you ask.

You can always book the time with me through my website at the time that is suitable for you, and during the time we spend together, you can ask me any questions to make your situation easier and financially beneficial for you. Therefore, visit my website today to organise the time for us to see if your financial situation can be improved.

By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement

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