RECENTLY, CPSA was contacted by a son whose mother had just gone into a nursing home.
He had lived with, and cared for, his mother for seven years. The house belonged to his mother. His income had come from the Carer Payment and the Carer Allowance.
After putting his career as a teacher on hold for seven years and keeping his mother out of the nursing home until her condition made continued living at home impossible, the son expected to be able to continue living in his mother’s house.
Nothing prevented him from doing so. He met all the criteria of a so-called ‘protected person’ under the Aged Care Act. He was obviously a close relative eligible to receive an Australian Government income support payment on the day his mother moved into a nursing home. He had lived and cared for her in her home for the required five years, seven in fact.
Enduring power of attorney: complication
But the son was worried. A sibling had been granted an Enduring Power of Attorney to administer his mother’s affairs.
His question was: what if my sibling decides to sell my mother’s house or make me pay rent I can’t afford? I am a protected person under the Aged Care Act, but am I really?
The short answer to his question, of course, is that his sibling probably could sell their mother’s house or rent it out. Nothing he or the Aged Care Act or any other law could do about it.
The long answer is a bit trickier.
What happens if a protected home is sold or rented out?
Nursing home care residents are means-tested. The resident’s family home is included in that assessment because it is no longer needed to house the resident. It’s become an investment property if you like.
But only a capped amount ($197,735.20 from 20 September 2023) is included in this means assessment. While this may only be a fraction of the home’s value in many cases, it can still force the sale of the home, because just short of $198,000 in cash needs to be available to pay for, usually, a nursing home bond.
Having a protected person living in the home prevents that capped amount from being included in the means test. The home is exempt.
Back to the son who is a protected person under the Aged Care Act. His fear was that his sibling would use their Enduring Power of Attorney to sell the home or rent it out.
However, it is very unlikely that his sibling would want him to leave the home. The minute he does so, the home would be included in nursing home means testing. The capped amount of $198,000 would be diverted from the proceeds of the sale of the home, or, if rented out, the rent income would be means tested.
All this would happen in an Enduring Power of Attorney scenario, where the sibling would be required to act in the best interests of their mother. In other words, if there was any plan to use proceeds from the sale or rental to progress interests other than those of their mother, the sibling could have a legal problem.
However, if their mother were to leave her nursing home or she passes away, her son loses his protection as a protected person.