An interest in a deceased estate is assessed by reference to whether it is able to be received — and where the estate’s debts are yet to be paid, it is not. So during administration your pension generally does not change. Once the estate is distributed to you, you must notify Services Australia within 14 days.
# You've Been Left Something. When Does Centrelink Start Counting It?
The solicitor's letter arrives a few weeks after the funeral. You are a beneficiary of your sister's estate, there is a house to sell, and the executor says it will probably be settled "sometime next year."
And then the worry starts. Are you supposed to tell Centrelink now? Has your pension already changed? Are you accruing a debt you do not know about, while sitting on money you have not received and cannot touch? The answer is more reassuring than most people assume — with one specific obligation attached to it, a deadline, and one way of forfeiting the reassurance that is worth knowing about.
This is general information, not personal financial advice. Confirm your own position with Services Australia, because the detail depends on the estate.
The general rule: not yet
An interest in a deceased estate is assessed by reference to whether it is able to be received — not from the date of death, and not from the date you found out you were a beneficiary (DSS Social Security Guide 4.6.5.80, https://guides.dss.gov.au/social-security-guide/4/6/5/80).
The mechanism is straightforward and it is the part worth understanding: if the estate's debts are yet to be paid, the interest is not able to be received. An estate in the middle of administration — with a house unsold, tax returns outstanding, creditors unpaid — is generally not something you can receive, and so generally not something sitting in your assets test.
The Guide puts a working period around this. It is generally accepted that a person will be unable to receive their interest in a deceased estate for up to 12 months after the death, and if the estate is finalised earlier than that, the interest is assessed from the date it is received or able to be received. Read that carefully, because it is an assessment convention rather than a prediction: it is not a statement that estates take twelve months, and a fast estate is assessed as soon as the money is actually available to you. What it means in practice is that for most of the wait, in most estates, nothing has happened to your pension. The letter on your kitchen table has not changed your payment.
The part that can cost you: delay of your own making
Here is the edge on the reassuring rule, and the draft version of this advice almost never mentions it.
If the estate has not been distributed twelve months after the death, the Guide directs that the facts be considered — what is preventing the estate being finalised, and whether the reasons are within the person's control. And then the sentence that matters: if a person has contributed to the delay, the interest is regarded as being available. In other words, the protection is for beneficiaries who are genuinely waiting, not for beneficiaries who are stalling. A person who declines to sign, drags out a dispute, or slows the administration in the hope of keeping their payment intact can find the interest assessed as though they had it.
The corollary is reassuring for the ordinary case, and the Guide states it: where the person is not the executor and the executor has discretionary power to distribute the estate, the person has no control over the delay and it is accepted that they have not contributed to it. Most beneficiaries are in exactly that position. If you are both a beneficiary and the executor, though, the question of who caused the delay is a live one, and our article on what being an executor actually involves is worth reading with that in mind.
Why the wait is normal
Worth saying plainly, because beneficiaries routinely assume a slow estate means something is wrong or that the executor is holding out on them.
Estates take months, frequently more than a year. Probate has to be granted, assets have to be located and valued, property has to be sold, and debts and tax have to be dealt with before anything is distributed — and the executor is often a grieving family member doing it for the first time. Our articles on the probate process and on what being an executor involves cover why it takes as long as it does, and our article on whether probate is always needed covers the smaller estates where it may not be. None of that is your fault and very little of it is within your control. What is within your control is the bit at the end.
The 14-day rule
Here is the obligation, and it is the reason to read this article.
Where the expected value of your interest is likely to put your total assets above the allowable assets limit, a review is scheduled for the date of distribution, and you must be advised that you are to notify the department within 14 days of distribution. Fourteen days — from when the money is actually distributed to you, not from when the estate was finalised on paper, and not from when you get around to opening the letter. The limit itself is indexed and is not quoted here; check yours with Services Australia.
This matters more than it sounds, because the event that starts the clock is one only you reliably know about. Centrelink has scheduled a review, but the estate does not report to them. If the distribution happens in March and you mention it in September, you have been paid at the wrong rate for six months and that becomes a debt. Our article on Centrelink debts and overpayments covers what that process looks like, and it is worth avoiding. The practical version: when the executor tells you money is coming, put a note in the calendar; when it lands, tell Centrelink that fortnight. Our article on using myGov and Centrelink online services covers how.
Life interests work differently
If what you have been left is a life interest — a right to income from, or use of, something for your lifetime rather than the asset itself — a separate rule applies. Income from a life interest in an estate cannot be assessed until probate has been granted, unless the income is actually received by you (DSS Social Security Guide 4.3.9.10, https://guides.dss.gov.au/social-security-guide/4/3/9/10). So receiving the income starts the clock regardless of where the paperwork is up to. Life interests have their own assessment quirks beyond timing, and our article on life interests and the Age Pension covers them.
An inheritance is not income. It is still going to matter.
This is the point people most often get half-right, so both halves need saying together.
An inheritance is not assessed as income. Amounts received by way of a legacy or inheritance are not treated as income, whether received as a lump sum or by instalments — the Guide treats all payments of a legacy as one-off lump sums rather than payments of a recurring nature (DSS Social Security Guide 4.3.9.50, https://guides.dss.gov.au/social-security-guide/4/3/9/50). So your pension does not fall because your "income went up," and that holds even where the executor pays you in two or three tranches.
But it absolutely affects your assets test. Once you have the money you own it, and it counts. And once it is sitting in a bank account or an investment it is deemed to earn income under the income test, whatever it actually earns. Our article on deeming rates covers how that works, and our article on how an inheritance affects the Age Pension covers the whole picture once the money has arrived. So the correct expectation is: nothing changes while you cannot receive it, and then quite a lot changes at once when you can.
Refusing it does not solve the problem
Some people, seeing the pension consequence coming, ask whether they can simply decline the inheritance — or have it redirected to their children instead.
It does not work for this purpose, and the rule is wider than most people expect. Deprivation provisions apply if the person waives their right to their interest in the deceased estate, or directs the executor to distribute their interest to a third party, or gives their interest to a third party after the estate has been finalised (DSS Social Security Guide 4.1.5, https://guides.dss.gov.au/social-security-guide/4/1/5). All three routes are treated as a disposal, and the amount is assessed as though you still had it under the general deprivation provisions (DSS Social Security Guide 4.1.1, https://guides.dss.gov.au/social-security-guide/4/1/1). Note the middle limb in particular: asking the executor to pay your share straight to your children — the version families most often propose, because it feels like the money never touched you — is expressly caught. You lose the money and keep the pension reduction. Our article on how an inheritance affects the Age Pension covers this in more detail, including deeds of family arrangement.
Worked examples
Margaret, 74, single, full Age Pension, owns her home. Her brother dies in February and she is one of three beneficiaries; the estate includes a house that takes fourteen months to sell. Margaret is not the executor, and her brother's will gives the executor discretion over distribution. On these facts the sequence is that her interest is generally not able to be received while the estate's debts are unpaid, and the Guide's twelve-month framing covers most of the wait. When the estate passes twelve months without distributing, the question becomes whether Margaret contributed to the delay — and because she is neither the executor nor able to control the timing, the Guide accepts that she did not. What is generally rational on these facts is to tell Services Australia now that she is a beneficiary and ask what they will need, then diarise the notification for the fortnight the money actually arrives. There is no benefit in guessing a figure while the house is unsold.
Robert and Helen, 69 and 67, part pensioners. Robert inherits from his mother's estate and, seeing that the money will take their assets over the limit, asks the solicitor whether his share can simply be paid to his two adult children instead. On these facts that is the middle limb of the deprivation rule — directing the executor to distribute his interest to a third party — and it is assessed as a disposal, so Robert would be treated as still holding the amount while the children hold the actual money. The pension reduction arrives either way. What is generally rational here is to treat the inheritance as arriving, notify within 14 days of distribution, and take advice on what to do with it afterwards rather than trying to route around it beforehand — our article on deploying an inheritance in retirement covers that decision, which is a better one made before the money lands.
What to actually do
While you are waiting, generally nothing needs to happen to your payment — but if you want certainty, tell Services Australia you are a beneficiary of an estate and ask what they need from you and when. Being on the front foot costs you nothing. Do not guess at a value early: estates shrink, debts get paid, property sells for less than expected, and executor costs come out first, so there is no benefit in reporting a number nobody can yet stand behind. Ask the executor to tell you when distribution is close rather than only when it happens, which gives you time to plan instead of fourteen days to react. Notify within 14 days of receiving it — the single most important line in this article. And if the estate is dragging and you have any influence over it, understand that using that influence to slow things down can cost you the very protection you were relying on.
The one-line version
While the estate's debts are unpaid your interest generally is not able to be received and generally is not assessed, and the Guide allows up to twelve months from the death for that — but if you contributed to the delay it is treated as available anyway, and the day it is distributed to you, you have fourteen days to tell Centrelink.
Sources
- DSS Social Security Guide 4.6.5.80 — Assessing interests in a deceased estate
- DSS Social Security Guide 4.3.9.50 — Income from gifts, legacies, royalties and native title claims
- DSS Social Security Guide 4.3.9.10 — Income from maintenance, property settlements and life interest
- DSS Social Security Guide 4.1.5 — Deprivation related to deceased estates, superannuation funds and separation
- DSS Social Security Guide 4.1.1 — General provisions of deprivation
This article contains general information only. It does not constitute personal financial or legal advice and does not take into account your individual financial situation, objectives, or needs. How an interest in a deceased estate is assessed depends on the circumstances of the particular estate, and the allowable assets limits are indexed and are not quoted here — confirm your own position and the current limits with Services Australia. The twelve-month period described is the assessment convention set out in the Social Security Guide and is not an estimate of how long probate or estate administration takes; probate and estate administration are governed by state and territory law and timeframes vary considerably, and questions about the estate itself should go to the executor and their solicitor. The worked examples are illustrations only and are not based on real people. Information is current as at 10 August 2026.
Theodore Karoumbalis is an Authorised Representative (No. 1237098) of iAdvice Technology Pty Ltd, AFSL 526700.
Key takeaways
- An interest in a deceased estate is assessed when it is able to be received, not from the date of death — and if estate debts are unpaid, it is not able to be received.
- The Guide works on a convention that an interest is generally unable to be received for up to 12 months after the death — an assessment rule, not an estimate of how long probate takes.
- If you have contributed to the delay in finalising the estate, the interest is regarded as available anyway — the protection does not cover stalling.
- Where the expected value would take you over the allowable assets limit, a review is scheduled for the date of distribution and you must notify Services Australia within 14 days of it.
- The 14-day clock starts on an event only you reliably know about, so a late report becomes a debt rather than an oversight.
Frequently asked questions
Do I have to tell Centrelink about an inheritance before I receive it?
Generally your interest is not assessed while the estate’s debts are yet to be paid, because it is not able to be received. If you want certainty you can tell Services Australia you are a beneficiary and ask what they need and when — it costs nothing. The obligation with a deadline attaches to distribution, not to being named in a will.
How long do I have to tell Centrelink once the money arrives?
Where the expected value of your interest is likely to put your total assets above the allowable limit, a review is scheduled for the date of distribution and you are to be advised that you must notify the department within 14 days of distribution. The clock runs from when the money is actually distributed to you.
Is an inheritance counted as income for the Age Pension?
No. Amounts received by way of a legacy or inheritance are not treated as income, whether received as a lump sum or by instalments. But that does not mean it has no effect — once you have it, it counts in the assets test, and once it sits in a bank account or investment it is deemed to earn income under the income test.
Can I refuse an inheritance so it does not affect my pension?
It does not work for that purpose. Deprivation provisions apply where a person waives their right to their interest in a deceased estate or superannuation fund and obtains no, or inadequate, consideration — so the amount is assessed as though you still held it. You would lose the money and keep the pension reduction.
Why is the estate taking so long?
Estates commonly take months and frequently more than a year. Probate has to be granted, assets located and valued, property sold, and debts and tax dealt with before anything is distributed — often by a grieving family member doing it for the first time. Delay is normal and is rarely a sign that anything is wrong.