Losing your job or being made redundant can be a stressful time. Not only can it affect your career, but it can affect your health and personal relationships
With Australians living longer than ever before1, combined with our aging population2,
the responsibility of caring for an elderly relative is a situation many of us will face
during our lives.
While it’s a film and TV cliché that once a family member reaches a certain age you ship
them off to a retirement home and forget about them until the holidays, the reality
is there are a range of living options you can choose from that will allow your elderly
relatives to retain their independence while providing you with peace of mind.
One convenient and flexible option is setting up a ‘granny flat right’ or interest. Granny
flat rights are either formal or informal arrangements that provide accommodation for
life, or a life interest in accommodation.
By establishing a granny flat right with the assistance of a financial adviser and
solicitor, you can provide much-needed support and care to your elderly relatives while
allowing them to retain their independence. Importantly, when established correctly,
this also allows for cash or other assets to be transferred from an Age Pension recipient
to a friend or relative, potentially without any impact on their Centrelink entitlements.
A granny flat interest does not require that a physical ‘granny flat’ structure be built.
A granny flat interest can take on many
Essentially, your elderly relatives provide funds or transfer the title of their home to pay you for providing the granny flat right.
It’s important to remember that while granny flat arrangements typically occur between family members, it’s not a requirement that the two parties be related.
Note: The transfer of the property must be registered with the relevant state or territory office of revenue. The elderly person cannot ransfer only part of the title, as this means they retain partial ownership of the property and a right to occupy the property.
To find out whether establishing a granny flat right is suitable for your personal situation, speak to a financial adviser, and a solicitor. You should also seek guidance from a registered tax agent to understand any tax implications involved in the creation of a granny flat interest.
1 Australian Bureau of Statistics, Gender Indicators, Australia, Jan 2013
2 Australian Bureau of Statistics, Australian Demographics Statistics, Jun 2011