Fulcher and Secretary, Department of Family and Community Services

[2005] AATA 332

Administrative

Appeals

Tribunal

 

decision and reasons for decision [2005] AATA 332

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/1386

GENERAL ADMINISTRATIVE DIVISION

Re:         BRYAN WALTERS FULCHER

Applicant

And:       SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             3 March 2005

Place:            Melbourne

Decision:For the reasons given orally at the hearing, the Tribunal affirms the decision under review.

(sgd) G.D. Friedman

Member

SOCIAL SECURITY - disposal of assets received as inheritance - whether monetary consideration received   

Social Security Act 1991 ss 11, 1123(1), 1126AA

REASONS FOR DECISION

3 March 2005  G.D. Friedman, Member

1.      This is an application by Bryan Fulcher (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 16 November 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 23 June 2004 to maintain an amount of $190,000 as an asset over a five-year period in calculating the rate of the applicant’s age pension. 

2.      At the hearing on 3 March 2005 the applicant represented himself and Ms E. King, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T28).

BACKGROUND

4.      The applicant was born on 2 August 1932.  On 8 September 2003 his mother died, and he inherited $787,620.84 from her estate.  In April 2004 the applicant was granted age pension.  On 14 April 2004 he gave his son and his daughter $100,000 each.  On 10 May 2004 Centrelink decided to maintain $190,000 ($200,000 less $10,000) as an asset over a five-year period from 14 April 2004 in calculating the amount of his pension.  On 23 June 2004 an authorised review officer affirmed the decision.

5.      On 22 September 2004 the applicant sought review of the Centrelink decision by the SSAT.  Following the SSAT decision to affirm the decision, the applicant lodged an application with the Tribunal on 22 December 2004 for review of the SSAT decision.

6.      The issue before the Tribunal is whether the applicant disposed of his inheritance for no or inadequate monetary consideration.

EVIDENCE

7.      The applicant gave oral evidence that his inheritance had arisen after his mother had inherited the money from his stepfather’s estate.  He said that his stepfather made a will in 1972 and in 1984 leaving his assets to the applicant’s mother, with 15 per cent to be left to the applicant’s children in the event that the applicant’s mother did not survive his stepfather.  The applicant told the Tribunal that in a will dated 2 July 1996 his stepfather left his estate to 7 people in equal shares including the applicant’s children, but not his mother.

8.      The applicant noted that in a will dated 13 September 1996 his stepfather left his estate to four people, not including the applicant’s mother or children.  He stated that this will was current when his stepfather died on 14 November 1997.  However, he initiated legal action to contest the will because he believed that his stepfather had been coerced into making a new will that did not reflect his wishes.  The applicant said that the action was settled out of court, and his mother received the house and other assets.

9.      In respect of his decision to give money to his children, the applicant acknowledged that he had been advised by Centrelink that such a decision would be viewed as a gift and may affect his level of pension.  However, he stated that he had acted on the wishes of his mother and stepfather.  He took the view that the money belonged to his children, as had been made clear in the earlier wills.  The applicant stated that he did not consider the money to be his, and therefore, he had not deprived himself of the $200,000 that he distributed.  However, he conceded that the Centrelink decision was probably correct in law.  He said that in no way had he intended to defraud Centrelink or anyone else by his actions.

CONSIDERATION OF THE ISSUES

10. Section 1123(1) of the Social Security Act 1991 (the Act) provides:

1123.(1)   For the purposes of this Act, a person disposes of assets of the person if:

(a)the person engages in a course of conduct that directly or indirectly:

(i)destroys all or some of the person's assets; or

(ii)disposes of all or some of the person's assets; or

(iii)diminishes the value of all or some of the person's assets; and

(b)one of the following subparagraphs is satisfied:

(i)the person receives no consideration in money or money's worth for the destruction, disposal or diminution;

(ii)the person receives inadequate consideration in money or money's worth for the destruction, disposal or diminution;

(iii)the Secretary is satisfied that the person's purpose, or the dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.

11.     In reaching its decision the Tribunal takes into account the oral and written evidence and submissions made at the hearing. 

12.     The Tribunal finds the applicant to be an honest and credible witness who believed strongly that he had acted appropriately in carrying out the wishes of his mother and stepfather, in giving a portion of his inheritance to each of his two children.  The Tribunal finds that he did not seek to defraud Centrelink in any way.

13. As the sole beneficiary of his mother’s estate the applicant held the legal interest in $787,620.84, and this amount became the applicant’s asset as defined in s 11 of the Act.

14.     In choosing to give $100,000 to each of his children, the applicant disposed of all or some of his assets (s 1123(a)(i) of the Act) and received no consideration in money, or in money’s worth, from his children for the disposal of part of the asset (s 1123(b)(ii) of the Act).  Allowing for $10,000 which is permitted to be deducted under the Act, the Tribunal finds that the balance of $190,000 is to be included as an asset of the applicant for a period of five years from 14 April 2004, being the day on which the disposal took place (s 1126AA of the Act).

15.     In all the circumstances the Tribunal finds that it is bound by the legislation and has no discretion in the matter.  The decision under review was correct.

DECISION

16.      For the reasons given orally at the hearing, the Tribunal affirms the decision under review.

I certify that the sixteen [16] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  3 March 2005

Date of decision:  3 March 2005
Advocate for applicant:                Self-represented
Advocate for respondent:            Ms E. King, Centrelink