Understanding asset assessments when moving to care

A common question from families transitioning a loved one into aged care centres on asset declaration, particularly about the family home and jointly held assets. Families often feel uncertain about what must be declared for the aged care fee assessment.

In general, the family home is exempt from assessment if a spouse continues to live there or if there is another ‘protected person,’ which may include:

• a carer who has lived in the home for at least two years prior to the resident’s entry into care and is eligible to receive an income support payment (eg Carer Payment), or
• a close relative who has lived in the home for at least five years before the resident moves into care and is eligible for an income support payment (eg Age Pension, JobSeeker, or Disability Support Pension).

Other assets, whether in Australia or abroad, owned individually or jointly by the person or their spouse, need to be declared. This requirement also extends to income. Many people are unaware that the obligation to declare assets and income continues beyond the initial assessment and that future changes, including Refundable Accommodation Deposit (RAD) payments, must be disclosed.

For Age Pension purposes, the family home remains exempt as long as the spouse lives there. If there isn’t a spouse or the spouse has left the property, the property continues to be exempt for two years. After this period, the property is assessed based on its net market value and the pensioner changes from a homeowner to a non-homeowner. Depending on the property value and the other assessable assets against the non-homeowner asset test, the pension can reduce or even stop. However, for aged care purposes, the two-year exemption does not apply. The property will be exempted while there is a protected person. The former home becomes an assessable asset, up to a capped amount, on loss of the protected person status.

Some common asset assessment scenarios

When the sole occupant moves to a care facility

If a person living alone enters permanent residential aged care, the net market value of their home is assessed up to a capped maximum amount. If the property is retained, its value is only assessed up to the capped amount for the aged care asset test. If the property is sold, the sales proceeds are assessed rather than the capped value, which usually results in the assessed means tested fees increasing. However, overall the fees may be lower if the accommodation cost is reduced by using the sales proceeds.  If the former home is subsequently rented out, the net rental income becomes assessable under the aged care income test.

When a spouse is living in the home

If one member of a couple enters permanent residential aged care while their spouse remains at home, the family home is exempt from the aged care initial assessment and ongoing means testing during this time. However, if the spouse vacates the home or also moves into residential care, the family home becomes assessable under the aged care means test, subject to a capped maximum amount.

When a carer in the home is eligible for an income support payment

If a carer has lived in the home for at least two years before the resident entered care and qualifies for an income support payment, the home may be exempt from the aged care means test assessment. The property will continue to be exempt while the carer continues to meet the protected person requirements.

When a close relative is eligible for an income support payment

The exemption rule for the family home under the aged care means test also applies when a resident is living with a close relative who has resided in the home for at least five years before the resident enters care and is eligible for an income support payment. Again, the protected person requirements must continue to be met in order for the property to continue to be exempt.

We are here to help, every step of the way

Aged care finances can be complex, so it’s important to understand your options and how they relate to your family’s situation.

Our team of specialist financial advisers are here to assist you in navigating these rules and making informed choices that consider both immediate and long-term outcomes. Our team can also provide full support with ensuring the fees and pension are correct by working directly with your accommodation provider, Services Australia and the relevant government departments.. Learn more about our accredited aged care financial advisers.

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