There’s a funny relationship between people and money when it comes to finding ways to reduce the costs of age care.
A woman called, her Mum urgently needs permanent residential care. Mum’s a wealthy self-funded retiree and ‘someone’ suggested a 5-year plan to gift most of Mum’s assets to her children, suggesting these gifts would reduce the cost of care.
The thing is…there’s no immediate financial impact simply because Centrelink rules say the gifted assets will be counted for a full five years as deprived assets. Only after 5 years will the deprived assets disappear from her assessable assets. In the mean time Mum will have been charged the maximum Means Tested Care Fee, which in this case would be payable in full over three years.
The risk lies in whether gifts can be done by Mum, while she has legal capacity, or whether it’s to be done under Enduring Power of Attorney (EPOA). If Mum’s legally capable of making and executing the decision, that’s fine. However, if it’s done under EPOA there’s potentially a problem as the EPOA’s has to protect the interest of the person they’re acting for.
It’s important to look at situations in entirely; not just mimimising age care fees, consider both financial and legal perspectives equally.