Avoiding Problems with Granny Flats
Recent changes to aged care legislation will result in less government assistance and a greater emphasis on the user pays model.
It is also likely that government funding will be directed to the consumer rather than the provider of aged care, and that families will need to play a far greater role in the provision of aged care.
It is also clear that we are living far longer than previous generations. In November the Australian Bureau of Statistics released data that showed that the life expectancy for Australian males had reached 80 years of age for the first time. Females had reached that mark back in 1990.
And the Australian Treasury estimates that by 2042, Australian can expect to have 1.1 million people over the age of 80.
Clearly the provision of services for this growing population of older Australians is going to be a major issue for future governments, and there will be greater strain on aged care facilities.
With longer life increases in illness and disabilities such as dementia will increase the strain on the aged care system.
Options as we age include staying in the home with the help of community care and family support, moving to an aged care facility, downsizing to a smaller home, renting, moving in with family, the family moving in with you and no doubt other less desirable options.
If "granny flats" are the chosen option, then the arrangement should be documented from the start, and a legally-binding family agreement put in place.
There are many compelling reasons for this, including:
• the maintenance of Centrelink concessions
• a clear understanding of everyone's obligations
• a clear understanding of what happens if the arrangement does not work out for financial reasons or because people simply don't get on together
• a clear path in the event of a family breakdown issues (for example consider what might happen if you move in with your child and their partner then they split up and you have paid money to renovate their house)
• avoidance of problems caused by unforeseen event such as the house having to be sold for financial or employment reasons, or the death of your child or their partner.
It is also important to catalogue whether any money you contribute is a loan or a gift.
For these reasons we strongly recommend you consider putting in place a family agreement which sets out everyone's financial obligations, the care obligations, the impact on each parties' Will and what happens in circumstances such as those listed above.