Providing for child from aged care

Roger wants to understand how he can help his aunt provide for her daughter with minimal impact on Centrelink and other benefits.

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Q. Roger
My aunt has a disabled daughter who has been assessed by the National Disability Insurance Scheme (NDIS) and will receive benefits. Unfortunately, my aunt is now in aged care and we will have to sell her house. Can the proceeds of the sale be put into a disability trust to care for her daughter? Will this have an impact on my aunt’s income and asset tests for Centrelink benefits?

A. If your aunt’s daughter qualifies for a Special Disability Trust (SDT), then your aunt can sell her house and place the money into the SDT for the benefit of her daughter. 

The first step is to determine if her daughter qualifies for an SDT. This link sets out the requirements.

The definition of severe disability is:

(a) a person who has reached 16 years of age:

  • whose level of impairment would qualify the person for Disability Support Pension or who is already receiving a Department of Veterans’ Affairs (DVA) Invalidity Service Pension or DVA Invalidity Income Support Supplement
  • who has a disability that would, if the person had a sole carer, qualify the carer for Carer Payment or Carer Allowance, and
  • who has a disability and is unable to work more than seven hours a week in the open labour market.

(b) a person who has reached 16 years of age:

  • whose level of impairment would qualify the person for Disability Support Pension or who is already receiving a DVA Invalidity Service Pension or DVA Invalidity Income Support Supplement
  • who is living in an institution, hostel or group home where care is provided for people with disabilities and funding is provided under an agreement between the Commonwealth, states and territories, and
  • who has a disability and is unable to work more than seven hours a week in the open labour market.

(c) a child under 16 years of age:

  • who is a person with a severe disability or a severe medical condition
  • who has a carer who has been given a qualifying rating of ‘intense’ under the Disability Care Load Assessment (Child) Determination for caring for that person, and
  • who has had a treating health professional certify in writing that, due to that disability or condition, the person will need personal care for six months or more, and
  • the personal care is required to be provided by a specified number of persons.

If the daughter does qualify, the property and/or cash funds can be placed into an SDT without affecting the daughter’s entitlements, provided the value of the property and the cash fall within the prescribed amounts. This link has the full details.

Additionally, your aunt will not be treated as having ‘disposed’ of an asset for Centrelink purposes, so the gift may assist her in qualifying for greater pension entitlements. 

A word of caution. I have assumed your aunt has the mental capacity to make a decision to undertake these transactions. If not, and you are relying on an Enduring Power of Attorney to undertake the transactions, then there is a problem, as an attorney cannot (with a few exceptions) exercise his or her powers to benefit a third party. If this is the case, you’ll need to consult a specialist estate planning lawyer to determine how you might proceed.

Rod Cunich is a lawyer with more than 30 years’ experience and who specialises in estate planning. If you have a question for Rod, simply email it to: [email protected]

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Disclaimer: This information has been provided by Rod Cunich and should be considered general in nature. Seek legal advice before acting on this information.

YourLifeChoices Writers
YourLifeChoices Writershttp://www.yourlifechoices.com.au/
YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.
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