Q&A – Centrelink and aged care treatment of the home held in a family trust

Find out what your peers are asking – based on real-life questions submitted to TechConnect.

By Janet Manzanero-Caruana, Senior Technical Services Manager

Q: My client’s home is owned in a Family Trust. The husband is in Aged Care and the wife is at home. There is no rental agreement between the clients and the family trust. Are the clients non-homeowners for Age Pension? 

If they are homeowners customarily the home would have “protected status” as the wife is at home. Is this protected status still the case where the home is held in a Family Trust?

A: Centrelink will ask to see the trust deed of the family trust to establish the basis on which the clients occupy the home. If the clients have an interest in the family trust and its deed provides the clients security of tenure in the home, then they are homeowners for Centrelink purposes.

If the clients have security of tenure in their home they are home owners for aged care purposes, however the value of the home is exempt as the wife, a protected person, lives in the home.

Homeowner for Centrelink purposes
The client is a homeowner if the client or their partner has a right or interest in the home they live in and the right or interest provides them reasonable security of tenure. The client’s home, whether fully or partly owned by the client and/or their partner, to which they have legal title will generally provide reasonably security of tenure.

The client’s home may be owned by:

  • a private company or a trust in which the client has an interest or 
  • a sale lease back home or 
  • a special residence (e.g. retirement village or granny flat arrangement where the entry contribution paid is more than the extra allowable amount, $216,500 from as at 1 January 2022),
  • as long as the clients have reasonable security of tenure.

The client will have an interest in a private company or trust if the client is a shareholder, director, trustee or beneficiary.
 
Home-owner for aged care purposes

The Subsidy Principles 2014 defines a homeowner as:

  • if single, the person has a right or interest in their principal home and the right or interest in the person’s principal home gives the person reasonable security of tenure in their home;
  • if partnered, the person or the person’s partner, has a right or interest in the home that is the person’s home, or their partner’s home, or their home and that right or interest in the home gives the person and/or their partner reasonable security of tenure in the home.

For the aged care asset means test the value of the clients’ home is assessable up to the capped value (currently $175,239.20). However, it is exempt where a protected person lives in the home. A protected person is:

  • the person’s spouse
  • a dependent child who is:
    • under the age of 16 or
    • aged 16 but under age 25 and studying full time
  • a carer who has occupied the home for at least two years and eligible for an income support payment
  • a close relation who has occupied the home for at least five years and is eligible for an income support payment. A close relation is a parent, sister, brother, child or grandchild.
       
 

More information

If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.

Disclaimer
The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.