Granny Flat Rights can be an option for senior Australians who want to downsize. They are also viable in circumstances when someone is either struggling to cope living independently due to health or financial reasons or want to be closer to their family.
This arrangement is more common that expected.
The ABS recently published figures that indicated 12.2 % of Australian over age 85 where in fact living with a child or other relatives.
In our recent experience, we have seen some excellent outcomes for our clients who for personal, health or financial reasons have engaged us to determine how a Granny Flat Right would work for them but not jeopardise their age pension.
Lets have a quick refresher on actually what is this Granny Flat business.
Generally, a granny flat is considered to be a self-contained unit attached to a private home. Social security, however uses the term ‘granny flat right’ to assess living situations where money or assets have been transferred in exchange for a right to a lifetime accommodation.
These granny flat rights are typically informal family arrangements where a client transfers money, assets or the title of his/her home to a family member (or other person) and in exchange, receives either the right to accommodation for life or a lifetime interest in private accommodation owned by someone else.
The client does not have any legal ownership of the property that they live in.
Written It is important to remember that Home care services can be also be accessed by a person living in a granny flat arrangement.
A granny flat right can be created in the following ways:
A client transfers or provides funds to another person in exchange for the right to live in an existing home owned by that person.
A client transfers or provides funds to another person to pay for expenses to modify that person’s home or to build a stand-alone granny flat to accommodate the client in exchange for a lifetime right to live there.
A client pays for the person to purchase a new home and the client also moves into this home with the right to permanent accommodation.
A client transfers title of their home to another person and receives a lifetime right to continue living in that home (the other person and their family may or may not also move in with the client)
Great idea but what are the risks
As you are giving away assets/money any changes to the extended family status quo can quickly make this idea not so great. Some of the risks include, the child you have established a GFR
·they wish to sell and move
·Family relationship breakdowns
·The arrangement just doesn’t work out
·The parent needs to access permanent residential care and no has no money/assets