Parental gifting

How will granny flat arrangements and gifting an inheritance advancement affect the pension?

Parental gifting

Amanda’s parents are considering a granny flat arrangement with her sibling, but are unsure how this, and gifting her an inheritance advancement, will affect their pensions.

Q. Amanda

My parents are both 90 years old and still live in their own home with some assistance. My father is on a full Veterans Affairs’ Gold Card pension and my mother is on the Age Pension. She also has Alzheimer’s Disease and it is becoming a burden for my father to care for her. He does not want to put her in a home and has wondered if it would be possible for him to sell his home and move in with my sister. Some of the sale value of his home would go towards buying a larger home, and my sister would also sell her home to contribute.

Would this affect their pensions? And would they be able to gift myself half of the value of their property as an advancement on my inheritance?

A. It’s a difficult time when your parents can no longer live on their own. Moving in with a family member can help to ease the burden as you mentioned. There are rules surrounding such an arrangement called granny flat rules. How such rules affect your parents’ pensions will depend on the type of agreement which is put in place. Therefore it is incredibly important that your parents and your sister seek independent financial and legal advice. As a general guide, you may find the article, Granny flat arrangements, useful.

In regards to gifting money to you as an advancement of any inheritance, this will be assessed under Centrelink’s gifting rules, which allow the gifting of $10,000 in a year, or $30,000 in a five-year period. Anything above this amount will be classed as a deprived asset and will be assessed for pension eligibility.


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    21st Nov 2014
    You can't have your cake and eat it too!
    Young Simmo
    21st Nov 2014
    Who said "You can't have your cake and eat it too! "
    My $2 Million cash sitting in the bank doesn't effect my full pension.
    Mind you I only half fill my Lamborghini each pension day, so I don't make waves.
    21st Nov 2014
    Young Simmo
    21st Nov 2014
    Hillbillypete, your comment rings of jealousy.
    Poor bugger.
    21st Nov 2014
    That amount of money would be deemed. I agree with Hillbillypete. You either have the money in an overseas bank where ATO and Centrelink can't find it or get ready to end up in gaol for a long time for fraud and have to pay back overpayment.
    Young Simmo
    21st Nov 2014
    Actually I made it up to try and get a bight, only 2 bights after 9 hrs is a bit disappointing.
    That's life.
    15th Sep 2017
    That is because your comment was just not worthy of comment
    Not Senile Yet!
    22nd Nov 2014
    So Gullible you fish in the River of life.......Made me smile Young!!!!
    As for the Government creating rules for this...they are just crazy!!!
    Far too hard to Police and a total waste of taxpayers money to do so****
    Should be encouraged and not taxed or penalties applied so as to free up houses and not clog up Old Aged Homes unnecessarily.....but that seems like basic economic obviously our MP's simply do not comprehend the benefits!!!!!
    Not to mention the extra boost to the Economy of selling Real Stamp duty.....GST on all the new goodies the new owners might de da de da....just to complex for those puppets currently engrossed in the free lifestyle of all MP's!!!
    Everyone of the regulations governing these type of changes is just about Punishing by taxing....grabbing a bit of loot just for the sake of is not designed to help people adjust nor is it designed to maximise our economic growth!!!
    Instead of penalising the Baby Boomers for Downsizing the Government should be encouraging them just to ease the housing squeeze or lack of it!
    Their are going to be 2.4 Million retiring in the next 10yrs.....that's 1.2 Million houses available...if the Government stops penalising the owners and does the opposite....encourages them to downsize via No Penalty or tax for doing so!!!!
    Regardless of money will all get spent or invested.....the Government stands to collect 10% GST no matter what!!!!
    What a Bunch of LOONS we have running this Country!!!!
    Lucky Lady
    22nd Nov 2014
    Hi Amanda, mine is a commonsense response to your question, through personal experience (could write a book on Aged Care (in Sydney), having 'been there' now with 3 of our folks). It's such a dilemma all round so I do hope some of these personal experience thoughts may assist you.
    Re selling home & gifting it to you two daughters: My mum (92 now) did that - sold the family home about 6 years ago & gifted half each to my sister & myself - in the knowledge she would be taken care of by my sister in her home, until this would be no longer possible, due to mum's futuristic failing health.
    Handy hint: Never sell/auction a house just before Christmas on a 'must do this' basis - family loses too much money in doing so at this time of yearI
    Another hint (suitable for some): I chose a little house with my inheritance, it was purchased in my name but my mum has an official 100% first mortgage on it (until she passes on). Not sure if this was done to 'protect' my new 'inheritance' asset for me or due to the pension/gifting/money in bank assets rule, as my cluey brother-in-law deals with the finances). This was done at the suggestion of our family solicitor, who's very, very cluey! possibly for various reasons...but I do know one main reason then wa so mum would importantly still receive her full Aged Pension plus medical/pharmaceutical health benefit card.
    Centrelink (now Dept of Human Services) website gives general info/thresholds/implications re assets/gifting/income eligibility for pension incl Veteran Affairs Pensions, like your dad has as well - & Dept of Vet Affairs website can give you further info , so you could seek some answers from both places online.
    However, I highly recommend your family also seeks more 'particularly informed' assistance/guidance/ideas from their family Solicitor too, before jumping into anything, especially as there are new laws I believe from July 2014 re assets/pensions/income/support etc.
    Re Granny flat idea:
    There are new, easier conditions/laws for Local Councils now to ranny Flats to be built within family properties - the minimum land size, boundaries etc have recently changed - what may not have been considered on a smaller block before may now be well approved by Councils.
    Our family also tossed all ideas around re granny flats etc for mum (dad had already passed on). My sister & hubby were also prepared to have mum live with them - my 'angelic' sister is a fully-trained carer for fully wheel-chair bound disabled people & she decided her 1st priority was to care for mum instead. She & hubby offered mum to sell their beautiful 2-storey modern town-house & buy a single storey home with a granny flat/semi-separate accommodation for mum - only prob was mum didn't like any they viewed - not modern or white enough for her new, modern So instead, they modified the ground floor of their town-house by utilizing their big open-plan kitchen/dining/loungeroom. Near the rear window they set mum up there - put in a big white modern glass wardrobe along one wall, her bed, a white standard lamp, her favorite painting & small antique desk (to personalize the space).
    To close off this area from the kitchen (to give mum privacy to sleep in) they attached a modern white fabric roll up blind to the well-secured hooks to the beam in the ceiling, so every night the blind was put down & my sister could potter around in the kitchen as usual. Meantime their new long all-white leather lounges, TV units etc were placed along area in front of mum's bed, but facing away from her sleeping space, so it could be utilized by all - plus, they built a ground floor very large semi-circular wooden rear deck with plastic drop-down blinds, giving them all yet another easily achievable living space. There was an existing toilet with hand basin downstairs next to the laundy - they had the laundry modified to include a suitable shower for mum & her additional nursing carers (came in on regular basis) with accessable handrails, had a bidet attached on top of her toilet too, to make things easier.
    This all worked well for all as mum could still walk with aid of a walker, then sis & hubby decided to sell townhouse & moved to their NSW Central Coast retirement unit with beautiful water views, with a lift & provided mum with her own & bathroom there. This was ideal for mum too, til recently when she was no longer able to walk (aged 91 then), mild Alzheimer’s, had a few falls ((taking my sister down with her - youch), very frail & needed to be physically lifted out of bed - so sis was no longer able to care for mum herself but got her into lovely aged care facility, very close to my sister, so she visits mum daily. Mum's now in a delightful 4-bed shared room with 3 other ladies, with 'all the fabulous attentive high-care' - she's only been able to have ice-cream, sustagen & water now for the past 11 months (amazing) & sleeps/dozes mainly. Most of mum's nursing home payments are government supported, as she's in this multi-shared room - it's 85% of her pension plus a bit more I believe - and as my sister says 'mum's happy & very well cared for & really wouldn't know at this stage where she is' which is so true.
    Mum, being an avid tennis player til 85, was very fit, however went physically downhill fast once she turned 90 & I note both your parents are 90 too. It's a 'huge ask' of your sister being a carer of not only one, but two parents - my fully-trained sister has had to seek professional phsycological help, to deal with her loss, now mum is no longer with her at home & is elsewhere, 'constantly in bed' in her nursing home. Sis has devoted her life/lifestyle/home etc to our mum's final years care - this would be a huge ask too of your sister! especially for 'both parents' - something you & your sister may want to re-think, and your dad too! I read your dad does not want to put your mum in a nursing home but having done 'all the research/ground-work' of 'what's on offer' out there I do have another longer-term suggestion for your family!
    My suggestion is mum & dad move into a lovely Retirement Village, very close-by hopefully to both you & your sister & other family so you can visit them often. The sale of their house would fund them to 'buy in' & the balance of their estate money from this purchase goes to you both later on, from their estate.
    They would have their own lovely level unit with accessible bathroom, within the manicured garden unit-type complex - most have café, hairdresser, library, nice walking paths, outdoor areas, community feel etc. Meals, washing, cleaning etc are all be done by staff & all support service providers can come in to help as they are doing now, but additional support/nursing care is very close by as needed & 'vital call' buttons for around the neck are supplied, giving you & them 'peace of mind'.
    Choose one which also offers 'Aging in Place' nearby within same grounds. This means if one or both of your parents need more intensive on-going full-on care they would have 'first place' on the list to move into the higher care nursing home there - Double bedrooms with own ensuite are generally offered too, at a 'refundable high price; or daily price. This way, your parents would be able to 'remain together later on' too, as needed, without another 'major' upheaval move & would be able to remain in familiar surrounds with newly made friends there & family close-by. They could have meals together & lounge-room quality time within the complex, plus nursing care close hand, without putting further burden/responsibility on your dad.
    Aged Care Facilities (here in Sydney) all have waiting lists, due to very high demand, so highly recommend to all getting names on lists asap, as 'nice suites' may take a year or more to become available... In trying to obtain a suite (own room & ensuite) recently for my elderly 'high care' mum-in-law, it has been 'a nightmare' - taken 9 months - they are 'rarer than hens teeth' - however, if parents have a home to sell for a 'substantial amount' (like over %650,000) to up-front fund their 'Aging in Place' it's often a different story & can be accommodated within their own 'Assisted Living Suite' quite soon, depending on their level of dependency/needs as assessed by ACAT.
    Re Granny Flat option: the new NSW laws indicate they can now be 'on-sold' too if built under certain 'far ore lenient' building conditions! One was buitt near me recently on a 1/4 acre block (incl main house) then sold on...(must have subdivided little piece of land granny flat was sitting on/ or similar).
    As both of your folks are 90 now, both their care needs will become far greater, perhaps rapidly, like my mum & mum-in-laws, for example.
    Therefore I suggest If your family is to go with the 'building a granny flat' option for both parents to live in forever more, that it 'at least' have the following:
    Biig bedroom - large enough for perhaps current queen bed & 2 single beds later on, plus big built-in wardrobe (with sets of drawers within it too - minimal furniture to fall over/run into; bedside table each, room for 'over-bed' table each to put meals, water on etc; room for big 'lifter' machine to lift them to bathroom etc when/if unable to walk; lots of maneuverability space for possible wheelchair/s.
    All doorways made very wide for possible wheelchairs, lifting machine, commode chair on wheels for toilet/shower & other big equipment eg oxygen machine etc if ever needed.
    Bathroom: Wide & totally open walk-in shower with two shower-heads - one fixed up high & one on adjustable sliding vertical rail; bidet within or on top of toilet for easier hygienic personal cleaning - plenty of space around toilet (for possible wheelchair/commode chair on wheels) for later on; no glass shower sides etc - all open - with loads of handrails & totally non-slip floor plus heating & shallow cupboards (attached to wall only) for toiletries.
    2nd Bedroom for 'later' full-time 'live-in carer/nurse to enable them to live-in full time, so neither parent goes to a nursing home. Yes, this type of care is expensive but if you equate it to say the current $1,200 - $1,800 or more 'daily fees' per person in a nursing home (in Sydney) for those with means, then a private live-in 24hr carer (own room is required) for your two folks would surely be a lot less than that! & they would probably need to use funding from sale of house to pay for this! Flat needs full reverse-cycle air conditioning!
    Open plan (not huge) living area (heated non-slip floors) with kitchenette - suggest this has a lower section of bench space (like a table) at one end so a parent can sit there & say chop vegies, even if in a wheelchair later on.
    Yes, it does all sound daunting & believe me, it can be, that's why we all need to prepare early!
    Think I'd be taking dad (& mum if appropriate) to see some of the Retirement Villages & Supported Living Village sectors (with high-care close by within complex too) to see how nice they are, the facilities & on-going Aging in Place care options & for him to consider now for him & mum to move into soon - he may be pleasantly surprised - I was!
    Do hope this personal experience input helps you & others reading this too & the very best to all of you!
    Young Simmo
    22nd Nov 2014
    Boy after reading all that I hope my 2 boys will be able to split up my 2 room tent with out too much drama.
    I can see it now, they will both want the room with the zipper door.
    23rd Nov 2014
    Thank you - luckyLady for your information. Yes, the Government keeps in changing the rules and it is getting harder and harder to understand their information. Written in Government speak.
    One building company here in Sydney, I think it is Masterton, is now offering a house with a built in 'granny flat' which is a great idea. This may be a solution to families wondering what to do when it comes to aging parents. The other thing to get into Aged Care here in Sydney if you don't have over $600,000 assets then you don't have access to the aged care that you would like.
    One thing is when looking a 'nursing homes' if you go in the front door and get the smell of urine, then turn around and go out. It means that patients are not being looked after properly. Even thought there is a course at Tafe for Aged Care, not all Nursing homes employ people with this Certificate. It is a simple course, and one can do the course via other means, ie online or private companies. It is Cert 3 in Aged care, but it would be great if Nursing homes insisted that their staff do Cert 4 and Diploma. This will enhance the quality of care of their 'clients'. No longer Patients they are Clients.
    Best people to talk to is Centrelink. Not the front line person but a "Social Worker or a retirement advisor or your private advisors who know something about the Centrelink system.
    the Centrelink system should be simple, but it is not. Too much Government Jargon.

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