It never fails to amaze me how many families think it’s fine to help Mum or Dad divest themselves of assets, particularly when it comes time for the parent to move to permanent aged care.
Yesterday I spoke with a man about his mother’s plans. Apparently Dad, when he was alive, wanted the kids to get their inheritance early…and Mum is ready to spread around $400K of her assets to the kids before she moves to care to help keep her cost of care down. The thing is…it’s not that simple, you can’t just give money or assets away! Actions like that come with hidden costs.
Mum held the belief “If I don’t have it (the money) any more ‘they’ can’t get blood out of a stone”.
Not true! ‘They’, Centrelink, know your current asset position and will simply ‘adjust’ their records accordingly if you gift more than $10K in a single year (up to $30K over 5 years). This adjustment could mean a reduction in aged pension entitlements, with no reduction in aged care fees.
If all money is given away, and pensions are reduced, it could mean family members have to pitch in to pay for their Loved One’s cost of care…or the Loved One could face eviction from care.
Please seek advice before doing something financially foolish!