Centrelink Paid Money After a Death. Does the Family or Estate Have to Return It?

Introduction

A Centrelink payment made after a death is not automatically an overpayment or a debt the family must repay. Some payments are valid, including a surviving partner’s bereavement payment, while a single pensioner’s final payment may cover the fortnight in which they died.

Executors should check the entitlement before treating the payment as repayable, confirming the payment, recipient and basis for any claimed debt with Services Australia. This article explains the documents, checks and next steps for estates and family members when money reaches the deceased’s bank account after death.

Interactive Tool: Check if You Must Repay a Centrelink Payment After a Death

Is Every Centrelink Payment After Death an Overpayment?

Bereavement Payments for Surviving Partners & Carers

A surviving partner may receive a lump sum bereavement payment to help with the change from a couple’s income to a single income. The amount is usually the difference between the couple’s payment and the new single rate, calculated over 14 weeks from the date of death.

A carer may also receive an authorised payment after the person receiving care dies:

• a person receiving Carer Allowance may get a lump sum of up to 14 weeks; and
• a person receiving Carer Payment may continue receiving it for up to 14 weeks and may also qualify for a lump sum bereavement payment.

These payments are not automatically debts.

Final Payments for Single Pensioners & Allowees

A single pensioner’s estate may receive the regular pension payment covering the fortnight in which the person died. The executor can access that payment through the deceased person’s bank account, and the payment stops after that instalment.

A single person receiving an allowance, such as JobSeeker Payment, receives a final payment only up to the day before death. There is no additional lump sum payment for a single pensioner or allowee under the information provided by Services Australia.

When a Payment Becomes a Recoverable Debt

Under Section 1223(1) of the Social Security Act 1991 (Cth) (‘Social Security Act’), a payment becomes a debt due to the Commonwealth when a social security payment is made and the person who obtains its benefit was not entitled to receive it.

Section 1223(1AB)(f) of the Social Security Act can apply when a payment intended for the deceased benefits someone who is not entitled to it. The payment may also become a debt where it was made accidentally, was not payable, or resulted from false information or a misrepresentation.

How Do We Notify Centrelink & Check the Payment?

Timeframes for Reporting a Death

Centrelink must be told within 28 days if a person who received a Centrelink payment has died. Services Australia will update its records, which helps prevent payments continuing after the person’s death.

A family member, executor or administrator can provide the notification. Suppose an executor notices a Centrelink deposit after the death; reporting the death within the 28-day period allows Services Australia to check whether the payment was properly payable or needs further review.

Essential Documents Required for Executors & Administrators

An executor or administrator who wants Services Australia to check whether money is owed must submit:

• the completed Executor/Administrator Request for information form; and
• proof that they are an executor or administrator.

Each person listed as an executor or administrator must complete the form before Services Australia can disclose information. The executor should also make multiple copies of the death certificate and have each copy certified by a Justice of the Peace. Certified copies can be provided to Services Australia and other organisations that request them.

The specific next step is to download and submit the Executor/Administrator Request for information form with proof of status.

Who May Be Responsible for Returning the Money?

The Role of the Deceased Estate in Settling Debts

The executor or administrator is responsible for finalising the affairs of the person who died and can seek advice from wills and estate planning lawyers. This includes dealing with amounts owed by the deceased estate after Services Australia confirms that a payment is a recoverable debt.

Under Section 46A(1) of the Probate and Administration Act 1898 (NSW) (‘Probate and Administration Act’), the deceased person’s real and personal estate are assets available to pay funeral, testamentary and administrative expenses, debts, and liabilities. A confirmed Centrelink debt may therefore be addressed from estate assets, rather than treated as an automatic personal debt of each relative, with probate and deceased estate administration lawyers able to assist.

Personal Liability Risks for Executors & Beneficiaries in NSW

A family member does not automatically become personally liable merely because they receive an inheritance. Section 46A(2) of the Probate and Administration Act applies where a beneficial interest in the estate has devolved, been given or vested in a person, and that person disposes of the interest in good faith before proceedings are started.

That person may then become personally liable for the value of the interest disposed of. An executor may separately face personal liability for distributing estate assets without providing for estate debts.

Situations Where Debts Are Written Off

A Centrelink debt may be written off where the deceased person left no estate, or where the estate has insufficient funds to repay the debt. Under Section 1236(1B)(d) of the Social Security Act, such a debt is treated as irrecoverable at law.

The Secretary may decide to write off the debt under Section 1236(1) of the Social Security Act. This is a discretionary decision, so the estate should not assume that a debt has been written off unless Services Australia confirms the outcome.

What Should We Do While the Amount Is Being Checked?

Steps to Secure Estate Funds & Pause Distributions

An executor should keep the Centrelink deposit in the estate account and pause distributions until Services Australia confirms whether the amount was properly payable. Estate records should identify the payment, the date received, and the account holding the funds.

Suppose an executor receives a sudden Centrelink deposit after a parent’s death. Holding the money while the payment is checked helps avoid distributing funds that may be needed to address a confirmed debt.

The Importance of Formal Written Notice From Services Australia

Services Australia will send a formal letter if it decides that money must be repaid. The letter will state the amount overpaid, explain why the money is owed, and provide the date by which repayment must begin.

The due date is usually 28 days after the letter is sent. An executor should keep the letter with the estate records, check the calculation, and contact the relevant Centrelink debt recovery service before the due date if the estate cannot repay the amount or needs clarification.

How Can We Challenge an Incorrect Repayment Request?

Requesting a Formal Explanation of the Debt

An executor can contact Centrelink to ask why the overpayment occurred or state that the estate disagrees with the debt. The repayment letter should show:

• the amount overpaid;
• why the money is owed; and
• the due date.

The repayment due date is not a general deadline for requesting a formal review. Centrelink can also discuss available repayment options where the estate cannot repay the amount by that date.

Applying for a Special Circumstances Waiver

Centrelink may waive all or part of a debt in special circumstances; financial hardship alone is not enough. Relevant circumstances may include:

• family and domestic violence;
• serious mental health challenges;
• addiction;
• natural disasters;
• homelessness; or
• other major life pressures.

Incorrect information does not automatically rule out a waiver, but the applicable conditions must still be met. The waiver may also apply after repayment, with any waived amount refunded or used to repay another outstanding debt.

Conclusion

A Centrelink deposit after death may be a valid bereavement or final payment, while other amounts may become a Commonwealth debt under Section 1223 of the Social Security Act. Executors should notify Centrelink, provide the required documents, retain the funds and review any written repayment request before distributing estate assets.

That check should happen before repayment or distribution is arranged. Contact probate and estate administration lawyers at LawBridge for practical legal guidance about the estate’s position, the information received from Services Australia and the appropriate next step.

Frequently Asked Questions