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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 clients are aged pensioners. One spouse entered residential aged care in July 2020. The spouse who remained living at home passed away in November 2020. How will the home be assessed by Centrelink and aged care asset test after for the surviving spouse who remains in residential aged care?
A: For Centrelink purposes the home is exempt for up to two years from the time the spouse passed away. After two years, the home is assessed at market value.
For aged care purposes the home is assessed up to the home exemption cap from the time the spouse passes away unless a protected person lives in the home. There is no two year means test exemption for the home when calculating aged care fees.
Any net income derived from the principal home is assessed as ordinary income for both Centrelink and aged care income tests.
Centrelink asset test
Where the client vacates the home temporarily the home is exempt for 12 months. However, where the client vacates the home to enter a care situation, the home is exempt for up to the later of two years after:
After the two-year period the market value of the home is assessed.
Aged care asset assessment
The market value of the home up to the home exemption cap ($171,535.20 at 20 September 2020) is assessed. However, the home is exempt if a protected person lives in it. The aged care income and assets assessment is assessed every quarter.
A protected person is:
While the former home may become assessable for Centrelink after the two year period after the client enters a care situation, it may continue to be assessed concessionally for the aged care asset test for more than two years, including being completely exempt where the person living in the home continues to be a protected person.
Click here to read additional information about considerations when entering residential aged care in our strategy guides.
If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.
DisclaimerThe 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.