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Holding out for that inheritance? The Government’s recent changes could be bad news for you.

Many people in the “sandwich generation” – who care for both their children and also spend time looking after parents – will have the idea of a moderate inheritance in the back of their minds.

Anyone who has been factoring a big family windfall into their future financial planning, to plug gaps in their own superannuation or pay off their mortgage, should check out the Government’s new asset testing rules for elderly Australians.

The situation has changed, and they are not very family friendly.

The new rules create dilemmas for elderly people trying to balance their own standard of living with the desire to leave an inheritance to their children.

If, as an older person, you refuse to run down your assets and plan to keep them as a bequest, then you yourself will be worse off because this may adversely impact on the pension.

The alternative is to draw down on your assets to live, which means leaving less to your children.

Under the pension changes introduced in January, the assets threshold – excluding the family home – for receiving a part pension has fallen to $816,000 from $1.2 million. For a single, it has fallen to $542,000 from $794,000.

The result of this will be that many people will lose their part-pension, and will instead have to rely on their own assets.

For newly retired people in their late 60s, who have the prospect of living for another two decades or more, that will mean running down their assets.

For many, it will mean selling the family home they had planned to leave to their children, and use that capital to fund day to day living.

It gives even more meaning to the phrase “how long can you afford to live.”

The new rules might soften the burden on Government finances, but one – perhaps unintended – consequence for many families will be the creation of different points of view on passing on the family wealth.

If, as an older person, you embrace the “spend it all because I can’t take it with me” approach the new rules are made for you.

Your adult children might have a different view.