There are incentives for families to step up and provide care for their loved ones rather than aged care facilities.
One of those is the “Granny Flat Provision”
The term “Granny Flat” when it comes to provision of accommodation for a Centrelink recipient, is not to be confused with Council’s definition of a “Granny Flat” but it simply means making available accommodation for someone else to reside.
The test is the genuineness of intent of the provider of the accommodation to provide life-time care and accommodation.
If for example, care is provided for 6 years, before care of a more personal nature such as palliative care is needed, then the intent is genuine.
The receiver of the care can gift an amount of money to acquire that care, without it being counted as an asset or regarded as a gift when determining pension entitlements.
The amount that is permissible is based on a reasonableness formula that multiplies the combined annual partnered aged pension rate by a conversion factor.
The conversion factor is related to the age next birthday on the date that the right of occupancy was established.
As an example, the conversion factor and allowable purchase for a 79 year old is annual partnered pension x 10.04 = $334,653
For an 88 year old it reduces to $175,326
A real example is the 88 year old, who sold her modest home and moved into the home of her single daughter who was not yet of age pension age.
The 88 year old’s assessed assets were reduced for Centrelink purposes, by gifting $185,326 to the daughter made up as follows:
$175,326 the purchase of life time care and accommodation, $10,000 gift.
A further $10,000 was placed to a funeral bond and a further amount to an annuity which had the asset value for assessment purposes discounted by 40%
There were discussions with an estate specialist Solicitor where there was fair provisioning for other family members in the aged person’s Will and Testament.
The residue of the sale proceeds was invested to supplement what was close to full pension being received by the aged person.
The daughter was successful in obtaining Carers Pension and Carer’s allowance for the care of her mother.
The money received from her mother was added to the daughter’s superannuation, and as this amount is not assessable until the daughter turned 67, which was not for another 5 years, full carers pension was paid.
The family was happy because their mother was being cared for in a family environment.
They acknowledged that their sibling sister was stepping in for an aged care facility at a lower cost than what might otherwise have occurred, had accommodation costs been paid to an institution.
An assessment had been completed that entitled the aged person for other assistance, which allowed the daughter some time out for shopping and her own personal needs.
Families often become shell shocked when talking to aged care providers when the cost of care confronts them.
The aged care providers are not aware of the financial capacity of the aged person.
Often, advice before decisions are made can minimise the impact or at the least consider viable funding options.
(This advice is of a general nature only and should not be relied upon. Individual advice should be sought at all times before proceeding)