Deprived Assets?

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Deprived Assets?

My mother was advised by her solicitor to gift her home to her daughters in 2008 so it would not be considered an asset.  The unit was valued at $280,000.00.  Last week I was advised by Centrelink that she owed $14,399.20 calculated over 5 years from 2008 - 2013.  My first question:- were we given incorrect information by the solicitor?  He said if she remained in her home 2 years after gifting that it would not be an asset. Secondly:- why have they taken so long to assess this?
 

Jill Donaldson

Hi Loriue,

We have put your question to Affinity Aged Care Financial Services and as soon as they reply will forward their advice to you.

regards

Jill

loriueb@hotmail.com

Thanks Jill.  I'm wondering if the rules changed since we received the advice in 2008 and they have been made retrospective.

 

Jill_Donaldson

Hi Loriue

Danni Dixon from Affinity Aged Care Financial has responded to your question with the following:

In this case, the first point would be to confirm how the transfer of the home was completed back in 2008 and how it was documented.

  • Was it a pure gift- did your mother give her daughters the home and not receive any compensation in return.
  • Were there conditions on the transfer as set by legal documentation- for example a right to live in the home.

These points will clarify whether the home should be treated as a gift or receive alternative treatment (such as Granny Flat arrangement)

 

If it is a gift, then Centrelink have specific rules around allowable gifting.

A person is allowed to gift $10,000 each financial year and up to a maximum of $30,000 over a 5 year rolling period.

Anything gifted above these amounts is considered to be a deprived asset and will assessable as an asset and deemed to receive income for the calculation of a persons pension entitlement.

Deprived assets are assessable for 5 years from the date of the gift.

Under the gifting rules, if the home was valued at $280,000, $270,000 would be considered a deprived asset and will be assessable for your mother’s age pension calculations.

 

It is hard to say the reasons why Centrelink have only assessed the overpayments now.

There are a few common reasons why a person’s file may be reviewed and a debt being raised:

  • Centrelink’s records may have only been recently updated with regards to your mother’s situation, including the family home.
  • The file was not update properly at the time and upon a recent review the error has been picked up.
  • There was data-matching from other government bodies.

 

Where Centrelink realise the information they hold is incorrect they complete a review of pensions paid vs pensions a person was entitled to over the relevant period. 

I hope this helps

Regards

Jill

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