Many older Australians entering retirement will decide to downsize from their family home. There are several options open to retirees. Our lawyers understand the legal landscape in this area and can assist clients entering this season to navigate the risks.
Transactions when downsizing for retirement can be quite legally complex. All sorts of factors come into play – lifestyle preferences, future care needs, the impact on pension entitlements, and the effect on your estate plan. Legal advice is crucial to ensuring a smooth transition into retirement, and to safeguard your lifestyle and assets into the future.
Our lawyers regularly provide advice to those considering their options into retirement, or considering aged care for themselves or their loved ones.
We offer the following services:
- Retirement village conveyancing
- Retirement village dispute resolution
- Aged care entry
- Granny flat agreements
- Purchasing a manufactured home
- Estate planning advice
Our lawyers are recognised for their expertise in this area, and are frequently requested to provide professional development seminars for other lawyers and accounting professionals.
Retirement Village Conveyancing
We offer a fixed fee retirement village conveyancing service.
There are several different ways of owning or occupying a unit in a retirement village. The most common are:
- Community or strata title model where the resident buys the freehold title to a unit in the retirement village.
- Long term lease. The lease will usually be a 99 year lease which extinguishes upon the death of the last lessee. This is by far the most common model for a retirement village in Australia. The resident’s leasehold interest is registered on the title to the underlying retirement village land.
- Long term licence to occupy. The entry costs for retirement villages using a licence model are usually lower, however the resident will not have a legal interest in the property which is registrable on the title to the retirement village land, and will not share in any capital gains.
- Company share model, where the resident owns shares in the village company to which are attached their right to reside in their unit.
The average retirement village resident will need legal advice to understand the nature of the legal interest that they are acquiring as it will usually differ significantly from that received with traditional home ownership. Rather than owning a freehold interest in land and buildings, usually your right to reside will be subject to the terms and conditions contained in your residence contract and the provisions of the Retirement Village Act 1999 (Qld).
We can assist you to make sense of the disclosure documentation and residence contract before you sign.
Aged Care Entry
We offer fixed fee Aged Care Entry consultations to assist you in understanding your options and advise you on the details and implications of your residence contract. This exercise will consider your current asset holdings, possible pension and tax implications, and your current estate plan. We can offer referrals to a financial planner where necessary.
Granny Flat Agreements
Granny flat arrangements appeal to many families as they seem to be a simple and informal way for children to help their parents into retirement. They are increasingly popular due to their favourable treatment by Centrelink. Any lawyer who regularly advises in this area will know that they can become extremely complex, extremely quickly! Legal advice is absolutely vital to help people considering this arrangement grapple with the many issues.
A person acquiring a granny flat interest will not have an interest which is registrable on the title to the property (unlike, for example, a registered lease). A person’s right to live in the house or granny flat will be based on the contractual arrangements between the parties (usually a parent and child). There is no legal requirement to document a granny flat interest, however failing to do so may result in uncertainty, costly disputes, and will make the arrangement difficult to substantiate to Centrelink. Without a formal written agreement which deals with factors like early exit and the sale of the home, arrangements may be legally uncertain. Many such cases have ended up in court.
Centrelink applies various tests when considering whether a transfer of money or property for the creation of a granny flat interest will be classed as a “deprived asset.” If the payment is a deprived asset, the money or property which you have transferred will be treated as still belonging to you and this could affect your pension. Additionally, the amount paid to acquire the granny flat interest, your age, and the current pension rates will determine whether your granny flat interest will count as your “principal home”, and be excluded from Centrelink’s asset test. If your granny flat interest is not classed as your “principal home”, Centrelink will continue count the money you have paid as your asset (that is, a deprived asset) for the purposes of your pension test.
A granny flat interest extinguishes upon the death of the holder of the interest, and does not form part of your estate. A person contemplating a granny flat arrangement should revisit their will, enduring power of attorney and/or estate plan at the same to ensure that their testamentary intentions are accurately reflected in their will.
Due to the complexity of this area of law, legal advice from a lawyer who practices in this area is strongly recommended. Our lawyers can provide you with holistic advice around the key elements of a granny flat agreement, tax and pension implications, and estate planning.