Mother Retire - Property not in trust

[turneg01]

Hi

My mother is 64, she is going to retire. She has her property under her own name. $500k approx, mortgage free

Is it to late to put the property in a trust so its protected?

If she needs government help my understanding is that they wont help because she owns the property in her own name

Thanks in advance

[spaceman]

Protected.....from what exactly????

Or are you simply trying to squirrel the cash away so that the other tax payers have to pay a larger share of any future care your mother might require??

Cheers
Spaceman

[Bob Kane]

$500k approx, mortgage free...

If she needs government help my understanding is that they wont help because she owns the property in her own name

When would a 1/2 millionaire ever need government help?

[blurt]

IANAL but I believe for rest home subsidy-type-help they go back about 5 years and can treat any assets gifted to the trust as her own, so I suppose the sooner the trust is set up the better from that perspective.

[turneg01]

Protected.....from what exactly????

Or are you simply trying to squirrel the cash away so that the other tax payers have to pay a larger share of any future care your mother might require??

Cheers
Spaceman

Wow you do have a way with words. Yes i want the asset protected. tax payers may need to pay more but she has all her life so i think she has earnt it

[turneg01]

IANAL but I believe for rest home subsidy-type-help they go back about 5 years and can treat any assets gifted to the trust as her own, so I suppose the sooner the trust is set up the better from that perspective.

k thats good to know. so after 5 years the asset is fully gifted?

[Winston001]

Wow you do have a way with words. Yes i want the asset protected. tax payers may need to pay more but she has all her life so i think she has earnt it

With respect, your mum has paid $650 per week in tax? Plus she has paid maybe $200 more tax each week to cover the police, nurses, teachers, roads, courts, army etc? Really?

That then leads one to wonder who paid for the elderly people in care while she was young and working? Who paid for their pensions? Where did that money come from?

[turneg01]

Have her property in a trust, if care is needed the government will help

OR

Dont have it in a trust and potentially lose it

Which would you choose for a family member?

Can someone help me answer the question, how much can you gift to the trust per year?

[artemis]

Have her property in a trust, if care is needed the government will help OR Dont have it in a trust and potentially lose it Which would you choose for a family member? Can someone help me answer the question, how much can you gift to the trust per year?

You can gift the whole amount at once without incurring gift duty. However, there are quite strict rules about depriving oneself of assets, then applying for residential care subsidy. The 5 year test does not apply. MSD can look back as far as it chooses and will take trusts into account. Lots of info online,so suggest have a good look before deciding.

Bear in mind that most people do not end up in residential care.

[speights boy]

Have her property in a trust, if care is needed the government will help
OR
Dont have it in a trust and potentially lose it
Which would you choose for a family member?

Who is this family member who will benefit from the proceeds of this house, if the taxpayer does end up funding her residential care ?

[turneg01]

You can gift the whole amount at once without incurring gift duty. However, there are quite strict rules about depriving oneself of assets, then applying for residential care subsidy. The 5 year test does not apply. MSD can look back as far as it chooses and will take trusts into account. Lots of info online,so suggest have a good look before deciding.

Bear in mind that most people do not end up in residential care.

Thanks for answering my question Yes i will do some more research online, i heard their were some changes that were happening recently so thought i better ask

[Maccachic]

Why doesn't she sell up and live up large... if she doesn't want to have to pay for her care?

[DaveW]

The house is her residence, the government will not force her to sell it. It doesn't matter if its a $200k house or a $2M house, if she qualifies for assistance then she will receive it like everyone else.

It sucks the tax payers in a way but it's no difference from wealthy retirees claiming the pension. They don't need to but they do because they can.

Check with a lawyer.

[Wayne]

It sucks the tax payers in a way but it's no difference from wealthy retirees claiming the pension. They don't need to but they do because they can.

Or because it isn't means tested!
Now we could have it means tested and have even more people trying to hide their assets like turneg01

[Rosco]

Thanks for answering my question Yes i will do some more research online, i heard their were some changes that were happening recently so thought i better ask

Hi,

just be careful that things do change over time. You might go through all the hassle and cost of setting up a Trust to protect against rest home costs, only to find the rules change.

Surely in 10-20 years the rules must change to look at the whole picture, as currently the laws are a joke. Billionaire with Trusts = rest home subsidies, wealthy person with $1million = paying full rest home costs. Student allowances and working for families are looking at the bigger picture, so i'm picking rest home subsidies to follow suit.

Under current rules you could sell the rental and other assets to a Trust(watch depreciation recovery and other costs) and then gift back $27,000 per year per couple. If full gifting completed within 5 years of going into a rest home, then would get subsidies.


Ross