June Gives Money to Her Son
June has recently been assessed as requiring residential aged care. Her son has lived with her for the past seven years to support his mother and is receiving a carer’s pension, so the home is exempted from her assessable assets.
| Assets |
|
|
| House |
$500,000 |
exempt |
| Cash |
$100,000 |
|
| Personal Effects |
$2,000 |
|
| Total |
$602,000 |
|
| Income |
|
|
|
|
| Pension entitlement |
$27,664 |
p.a. |
$1,064 |
per fortnight |
| Investments at 4% |
$4,000 |
p.a. |
on $100,000 |
|
| Total |
$31,664 |
|
|
|
| Ongoing costs |
|
|
|
|
| Basic daily fee |
$21,527 |
p.a. |
$58.98 |
per day |
| Daily accommodation contribution |
$7,894 |
p.a. |
$21.63 |
per day |
| Living expenses |
$3,650 |
p.a. |
$10.00 |
per day |
| Total |
$33,071 |
|
|
|
| June's cash flow |
($1,407) |
|
|
|
Although June is eligible to be a low means resident, she is unable to meet her cost of care from her age pension and investments. Note that if June paid a refundable accommodation contribution instead of a daily accommodation contribution her RAC would be $105,853 (20 March 2023) (Lane & Whittaker, 2016).
Let’s look at the impact on June’s cost of care, if before she enters the aged care facility, she gifts $10,000 to her son on the 30th June and a further $10,000 on the 1st July.
| Assets |
|
|
| House |
$500,000 |
exempt |
| Cash |
$80,000 |
|
| Personal effects |
$2,000 |
|
| Total |
$582,000 |
|
| Income |
|
|
|
|
| Pension entitlement |
$27,664 |
p.a. |
$1,064 |
per fortnight |
| Investments at 2% |
$3,200 |
p.a. |
on $80,000 |
|
| Total |
$30,864 |
|
|
|
| Ongoing costs |
|
|
|
|
| Basic daily fee |
$21,527 |
p.a. |
$58.98 |
per day |
| Daily accommodation contribution |
$4,387 |
p.a. |
$12.02 |
per day |
| Living expenses |
$3,650 |
p.a. |
$10.00 |
per day |
| Total |
$29,564 |
|
|
|
| June's cash flow |
$1,300 |
|
|
|
As we can see, June has reduced her assets from $102,000 to $82,000. Her DAC would be recalculated as $12.02 (20 March 2023) per day or a RAC of $58,807 (20 March 2023), saving $3,508 per year in the first year that June pays by DAC. June's cash flow deficit is gone replaced by a modest positive (Lane & Whittaker, 2016).
Lane, R., & Whittaker, N. (2016). Aged Care Who Cares? In R. L. Whittaker, Aged Care Who Cares? (pp. 181 - 182). Noel Whittaker Holdings Pty. Ltd.
Steve Jenkosky trading as Golden Age Advisory is an Authorised Representative of Synchron AFS License No. 243313.
Unless specifically indicated, the information contained in this 'Case Study' is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser.
