Opinion
How soon do we need to sell the house after entering aged care?
Noel Whittaker
Money columnistMy sister entered aged care almost two years ago in NSW. My niece is busy trying to sell her home before the two-year “aged care exemption” expires. The house is empty and on the market. There seems to be conflicting advice regarding what happens after the exemption expires. It would be great if you could clarify this for me.
Rachel Lane of Aged Care Gurus says your sister’s home is included in her aged care assets (unless a protected person lives there) up to a capped value of $193,219. This remains the case for as long as the home is kept. Any amount she pays towards her refundable accommodation deposit (RAD) is also included in her aged care assessable assets.
If you’ve moved into aged care and are on the pension, delaying the sale of your home can affect the amount of money you receive.Credit:
From a pension perspective, the home is an exempt asset for two years from the date your sister (or her partner, whichever is later) moved out. After the two-year exemption she is treated as a non-home owner (which gives a higher asset-test threshold and cut-off point) but her home is included in her pension assessable assets. The RAD is an exempt asset for her pension.
If she keeps the home beyond the two-year pension asset-test exemption it is highly likely her age pension will be reduced or lost, but selling the home will likely result in her aged care fees going up.
Without crunching the numbers it is impossible to say whether the loss of pension would be greater than the increase in fees. Whether or not she should keep or sell her home has far more wide-ranging consequences than her pension and costs of care; you should seek advice.
I applied for a Seniors Health Card in May and I’m still waiting for Centrelink to review my application. Centrelink advised that they have been inundated with applications because of the cost of living crisis and this is causing delays. What is the timeframe for Centrelink to review applications?
Services Australia general manager Hank Jongen tells me July through to September is typically the busiest time of year for Services Australia.
“This is because of tax time and millions of families undergoing the balancing of their payments. In response to recent government policy changes, there has been an 85 per cent increase in Commonwealth Seniors Health Card [CSHC] claims for the 2022-23 financial year. During that time, Services Australia received 117,000 CSHC claims, which was 54,000 more than the 2021-22 financial year.
“We’re doing what we can to reduce claim processing times, including recruiting more staff, but it takes time to train them. We’ve also improved our online CSHC claim so it’s simpler, with pre-filling of your information in to the claim where we have it. We thank people for their patience – our staff are working hard to provide the best possible service.”
I have been diagnosed with terminal cancer. I am 81 and receive a small part pension, as does my husband. In my will I have left my BT shares equally between my two daughters. Would it be financially better for them to receive the shares or to receive them as cash? The value is approximately $110,000.
Your best strategy depends on what each daughter wishes to do with their bequest. If they intend to keep the shares after you die, you’re better off just leaving them the actual shares and there will be no CGT to pay until they dispose of them.
However, if one or both of them prefers cash, you need to have a discussion with your adviser as to whether it’s better for you to convert the shares to cash, or let the estate cash in the shares and pay any applicable tax. If you cash in the shares there should be no effect on your pension, but there could be CGT.
Centrelink’s Income Stream Review requests my self-managed super fund (SMSF) current account balance. Please can you advise if a current account balance in a SMSF means the annual minimum drawn down of funds for income purposes?
The total balance of your super will be assessed as an asset for the assets test. That balance will also be given a deemed income and that will be the income for income test purposes. The amount you draw is generally not relevant unless it is a grandfathered pre-Jan 1, 2015, account-based pension.
Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Email: noel@noelwhittaker.com.au
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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