Dear Sekops,
Your wife’s sister should get the advice of an accountant, as once the estate proceeds are able to be paid, Centrelink will look to assess your entitlement as an asset. Most people are not aware Centrelink can assess funds held in an estate and as such keeping funds in the estate for a prolonged period may not be a viable option. Other common but unhelpful strategy to minimise impact to aged pension is gifting - as there is a very small limit. There are options around this issue but need full tax affairs and is something her accountant should discuss with her.
As to your wife - she should in writing to the others that she does not agree nor consider this being advisable but if she is voted down (I assume she is 1 of 3 and decisions have to be made jointly) if a beneficiary ask to distribute an inheritance a certain way, it would be advisable for your wife and the other sister to enter into a waiver of liability with your wife’s sister that you all did not agree and that she is to indemnify the others of her decision to be distributed inheritance in this way. Need legal advice.
Good luck!
-Nighthelyn