This is Brian Heard from CRH Law talking to you today about granny flat arrangements. When families gather and chatter about things that matter, our thoughts and our discussions can turn to the issue about aging parents. What the downsides of living longer as many of us do is that we could potentially become dependents on others that is relied on others to provide care for us. When that happens, there are options available such as home care, residential age care or even they can look after each other that is the parents themselves.
But interestingly since the first of July this year, another form of caring has arisen as a real possibility when it comes to the issue of parents in particular saving money when it comes to the issue of caring and that is called family caring. That is members of the family providing in house care to their parents by way of what is called family agreements. What that means is a parent who needs care can transfer for example an asset or assets to a particular adult child in return for that child providing care to that parent. They can transfer for example their home to a particular child and the child then promises to look after that parent for the rest of their life.
Now the trouble with doing at it sounds very reasonable to some extent but the trouble is it can affect your pension, because what the Center Link people say is that if you give away things then those gifts can in fact impact upon your pension adversely and that is why to encourage this family agreements, Center Link has actually come up with an exemption called the granny flat exemption where these arrangements can be added into without affecting a persons pension.
If a person on a pension gives an asset such as a home to a child, in exchange for care by that child for the rest of their life, then that gift is exempt from the gifting rules. In other words it is not taken into account in assessing the assets of that pensioner. As a result, there is a real incentive towards into this arrangements particularly because it keeps the care within the family and avoids those unfairly unsavory option of going into residential age care, the so called home like environment of residential age care.
When parents are aging and you have discussed the issue of who is going to care for them and they need care, family caring is a real option and the granny flat exemption is a real incentive for the family to take up this option to provide care for those that they love.