Alex, a 68-year-old, had experienced an injury in his 50s and lived with a disability as a result. Following the injury he experienced a serious illness and named his relative, Darren, as his Enduring Power of Attorney. Alex’s disability meant that he was no longer able to work, but he was financially stable as he received compensation and access to his superannuation as well as the disability support pension.
After some time, Darren and his wife Charlotte decided to buy a property for their family. They suggested that Alex contribute financially to cover the cost of building a mobile home for him to live in on the property. In return, Darren and Charlotte promised to be responsible for Alex’s care needs.
An older person living with disability and depending on others for care may be vulnerable to financial exploitation and other forms of abuse. Asset for care arrangements (where one person gives up their property or money to another person in exchange for care) are not regulated by any laws in Australia. There is no easy legal fix for when this arrangement falls apart. The older person often walks away with nothing.
At Darren’s request, Alex contributed all of his compensation and superannuation funds to the property purchase and upgrade – a total of over $280, 000. Alex felt confident in this decision as he thought that he would be able to sell the mobile home in future if needed. When they all moved onto the property (in separate dwellings) Darren and Charlotte asked Alex to pay rent and half of all bills. They failed to provide any care for Alex despite receiving a carer’s pension. Darren and Charlotte then became controlling and verbally abusive towards Alex and he felt intimidated in his own home. Things became so intolerable that Alex felt he had no option other than to leave but he had nowhere to go and entered a period of homelessness. Alex then travelled interstate where a supportive relative was located.
Alex attended another community legal centre who, aware of our specialist elder abuse service, referred him to the Seniors Legal and Support Service (SLASS) at Caxton Legal Centre. SLASS provided extensive social work support for Alex as he disclosed suicidal thoughts as a result of living through multiple traumas, including his recent experience of elder abuse.
Caxton’s social worker used a trauma informed practice model to provide appropriate emotional support, mental health counselling and the opportunity to reconnect with support networks. Eventually the SLASS social worker was able to provide a facilitated referral to a long-term trauma counselling service. SLASS also helped Alex find a place in a long-term affordable retirement village.
Our lawyer undertook legal negotiations on Alex’s behalf, corresponding with Darren and Charlotte’s lawyer in an effort to help Alex get his money back. Unfortunately, Alex learned that if he sold his mobile home he would be left with very little money as the sale price had to cover the cost of relocation. Alex, Darren and Charlotte could not reach an agreement. Anticipating that legal proceedings may need to be commenced, SLASS has secured pro-bono legal representation for Alex through a private law firm and negotiations are continuing.
Alex is deeply grateful for the help and support provided by the SLASS service at Caxton Legal Centre. While the financial matter is not yet resolved, Alex has a greater sense of wellbeing now that he has escaped his abusive home and found secure housing. He continues to access counselling to help him cope with the effects of trauma and is determined to reach a just outcome in the effort to reclaim his money.
Things you need to know about sharing assets with family
Families sometimes provide for the care of an older family member into the future by using the older person’s savings or money from the sale of their home to:
- Build a flat or bungalow for the older family member to live in.
- Renovate or extend a family member’s home to make room for the older family member.
- Pay off a family member’s mortgage.
- Buy a new house where the family can all live together.
Or sometimes a family member moves in with the older person and cares for them; and in return they are given part or sole ownership of the house.
These are all called ‘granny flat’ arrangements by Centrelink.
If you are considering any of these arrangements, you need to think through how it will work in practice, and get advice on the following:
- Can you get your money back if things change?
- Can you claim a property interest or be compensated later for what you contribute?
- How can you make it clear that your contribution is not a gift?
- What changes will be needed to your and other family members’ wills?
- How will it affect your pension and tax?
- If you move into aged care later on, what effect will the granny flat investment have on your aged care costs?
Centrelink has special rules on granny flats. If you pay no more than a ‘reasonable’ amount for your ‘granny flat interest’, it should not affect your pension entitlement.
Giving away money or other assets (‘gifting’) can affect your Centrelink payments. ‘Gifting’ more than what Centrelink allows may reduce your pension entitlement and affect the government assistance you receive for aged care accommodation fees. Centrelink also recommends you put your ‘granny flat’ arrangement into writing, otherwise it may treat your contribution as a gift to your family.
Information and guidance are available from Centrelink’s Financial Information Service which can be contacted by telephoning 132 300.
Legal information excerpt from: Care for Your Assets, Money, Ageing and Family by Seniors Rights Victoria.
This blog post is intended to give general information about the law in Queensland as at June 2021. Its content does not constitute legal advice and if you have a specific legal problem, you should consult a professional legal advisor.