We all know Australia has an ageing population. Dual occupancy, where multiple generations live under the same roof, is becoming more common in Australia for a range of social, cultural and financial reasons. This has created an interesting, almost ‘retro’ legal development.
Consider the position of a senior or elderly woman with two adult children, living independently. She may be physically frail and needs assistance with daily living activities or perhaps she is lonely and wants to plan for the future. She has reached a care crossroads. Depending on her stage of life, she will start considering downsizing, a retirement village, aged care facility, community care or moving in with her family for ongoing care.
It is often the case that parents will sell their family home and the proceeds are used to accommodate them at one of their children’s homes. Other children may get anxious about this decision, as it could result in part of their ‘inheritance’ being reduced while increasing the value of an asset of another sibling. That’s where Written Family Agreements come in.
Written Family Agreements involve the use of sale proceeds of the parents’ home to build an extension or granny flat for the parent to live in. The monies would become a debt owing by the child to the estate of the parent on their death or transfer to an aged care facility. However, this debt would be reduced over time (for example, by the comparable community care rate) in recognition of the care provided by the child. The ongoing care services to be fulfilled by the child should be comprehensively detailed in the agreement.
These types of arrangements may impact on the pension entitlements of the parents and have tax implications for the child. This should be addressed and resolved prior to entry into a Family Agreement.
The main advantage of a Written Family Agreement is that it is a transparent financial outline for the whole family. Other family members would be less fearful, so it may reduce conflict within the family. It is also a legal, enforceable guarantee of personalised, responsive and quality care in a family environment, giving peace of mind to a parent at a time in their life, when they would certainly crave it.
Chris Parker is a partner at Charlton’s Lawyers, Bundaberg’s longest serving law firm.