Are you an attorney or administrator tasked with selling a principal’s family home to fund their aged care, but facing challenges from a co-occupant claiming rights as a ‘protected person’?
This guide is designed to help you grasp the fundamental aspects and successfully navigate the complexities of this situation with confidence.
1. Understanding the Basics
As an enduring power of attorney or administrator, you may need to sell the family home to cover the principal’s aged care refundable accommodation deposit. However, this process can be complicated if someone is living in the home, such as a spouse, child, or carer.
2. Protected Persons and Exempt Assets
A property is not considered an asset for aged care assessment if it is occupied by a ‘protected person’. It’s crucial to determine if an individual qualifies as a protected person, as this affects how the family home is assessed. If a protected person resides in the property, the home is considered an ‘exempt asset’ for aged care purposes. This is different to the rules that apply to considering pension eligibility.
3. Key Distinction: Protected Person vs. Right to Stay
While a protected person status means the home is excluded from aged care assessment, it does not grant an inalienable right to stay in the property and prevent its sale. This distinction is critical for attorneys and administrators to understand.
While in many instances family members are cohabiting so one or more can provide the others with care and support, in other cases they can be arrangements of convenience, or exploitive.
Our elder financial abuse team too often sees adult children trying to rely on their asserted status as a protected person to justify staying in the family home and continuing the rent-free lifestyle they have become accustomed to without any history of providing care, even when doing so is financially damaging to their parent/s.
4. What is an Exempt Asset?
An exempt asset is disregarded for aged care assessment, meaning the principal’s aged care costs would be lower as they are assessed as a ‘non-homeowner’. The home care assessment is different from tests that apply to pension eligibility.
5. Who is a Protected Person?
A protected person can be:
- A partner or dependent child of the principal.
- A carer eligible for an Australian Government income support payment who has lived in the home with the principal for at least two years.
- A close relative eligible for an Australian Government income support payment who has lived in the home with the principal for at least five years.
A protected person can remain in the property indefinitely, and while they do, the home remains an exempt asset. They typically need to complete forms with Centrelink to confirm their status.
6. No Protected Person in the Home?
If there is no protected person in the home, it becomes an assessable asset for aged care purposes up to the home exemption cap, which is $197,735 as of January 1, 2024. This means the principal may face significantly higher aged care fees unless the property is worth less than the cap.
7. Selling the Family Home with a Co-Occupant
If a non-protected person is co-occupying the property, selling the home depends on various factors, including any asserted rights to remain (e.g., equitable rights). Selling the home may attract scrutiny, so obtaining legal advice is prudent. Attorneys or administrators can seek advice from VCAT to protect themselves from liability if the decision is disputed.
8. Enforcing the Sale
If you are an administrator or attorney and issues arise removing a family member from a property, there are a range of legal options, including commence legal proceedings to recover possession and force an eviction. It is important to get legal advice before making a demand to vacate or commencing court proceedings.
9. How Moores Can Help
At Moores, we specialise in Powers of Attorney, guardianship, administration, and applications in VCAT and the Supreme Court of Victoria, including elder financial abuse issues. We are here to discuss any actions regarding the status of a protected person and the sale of the family home to fund a refundable accommodation deposit or other expenses.
Contact us
Please contact us for more detailed and tailored help.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.