Protecting Assets in Aged Care in Australia

When a family member moves into residential aged care, it can feel like the financial ground shifts beneath everyone’s feet. The costs involved are real, the rules are complex, and the stakes are high. For many Australian families, the family home represents a lifetime of work and careful saving. Understandably, questions around estate and asset protection in aged care come up quickly once the conversation about care begins.

The good news is that thoughtful, early planning can make an enormous difference. At MiQ Private, we have found that families who seek guidance before entering the aged care system are far better placed to protect their assets and manage their costs than those who act in response to a crisis. This article outlines how the aged care system assesses your assets, which protections exist, and what planning strategies are worth considering.

How Aged Care Costs Are Calculated

Understanding what you pay for aged care begins with the means assessment. Services Australia conducts this assessment to determine the fees you are asked to contribute toward your care and accommodation.

Since the major reforms that took effect on 1 November 2025, costs are now structured across a few key categories. Every resident pays a Basic Daily Care Fee, currently set at $66.80 per day, which represents 85% of the basic Age Pension and covers day-to-day living costs such as meals, laundry, and cleaning. Beyond that, residents who entered care on or after 20 March 2026 may also be asked to contribute a Non-Clinical Care Contribution, which is a means-tested fee capped at $107.32 per day, with a lifetime cap of $137,917 or four years in care, whichever comes first. There is also the Hotelling Contribution, which stands as a max of $22.15 per day. 

Accommodation costs are a separate matter. The Refundable Accommodation Deposit, or RAD, is a lump-sum payment made to secure your room in a residential aged care home. The current RAD cap sits at $758,627. Alternatively, residents can choose to pay a Daily Accommodation Payment, or DAP, or a combination of both. How you structure this decision can have meaningful implications for your overall estate and your Age Pension eligibility.

The Role of the Family Home in the Means Assessment

For most Australian families, the family home is the largest asset they own. How it is treated in the aged care means assessment depends on the circumstances of entry into care.

If you move into residential aged care and your home is left vacant, it is generally exempt from the Centrelink assets test for two years from the date you enter permanent care. This exemption period allows families time to make considered decisions rather than rushed ones. However, once those two years elapse, the home is assessed at its market value and counted as an asset, which can affect both your means-tested fees and your Age Pension payments.

The situation changes significantly if a “protected person” continues to live in the home. A protected person may include your spouse or de facto partner, a carer who has lived with you for at least two years and who receives an Australian Government income support payment, or a close relative who has lived with you for at least five years and who also receives an income support payment. Where a protected person remains in the home, its value is excluded from the aged care assets test indefinitely, which can substantially reduce your means-tested fees and preserve your pension entitlements.

If your home is included in the means assessment but a protected person does not reside there, the amount counted is capped. As at 20 March 2026, the cap is $214,884 (or the net market value of your home if lower), which provides some protection for families even when the home is assessed.

How RADs Interact with the Assets Test

One aspect of aged care planning that is often misunderstood is how Refundable Accommodation Deposits are treated differently under the Centrelink rules and the aged care means assessment.

For Age Pension purposes, RADs are exempt from the Centrelink assets test. This means that paying a substantial RAD does not reduce your Age Pension entitlements, which can be a meaningful advantage for residents who want to preserve their pension income during their time in care. For example, a resident who pays a $500,000 RAD would not have that amount counted toward their asset threshold under the Age Pension rules.

However, RADs are included in the aged care means assessment, which means they can increase the assets-tested component of your daily fees. This dual treatment is one of the reasons why the decision between paying a RAD, a DAP, or a combination of both deserves careful thought rather than a default choice. We have found that the right answer depends heavily on individual financial circumstances, including the value of other assets, investment income, and the family’s broader estate planning goals.

Gifting Rules and Deprivation Provisions

Some families consider gifting assets to reduce the value of their estate before entering aged care. While gifting is permissible, strict rules apply, and exceeding these limits can trigger what Centrelink calls “deprivation provisions,” where the gifted amount is still counted as an asset for a period of five years regardless of whether it has been given away.

Currently, the gifting limits allow for a maximum of $10,000 in any one financial year, and no more than $30,000 over a rolling five-year period. Amounts given beyond these thresholds are treated as if they were still owned by the person who gifted them, which can affect both Age Pension payments and aged care fee calculations. Planning any gifting strategy well in advance of entering care is essential to avoid unintended consequences.

Estate and Asset Protection Strategies Worth Knowing

There is no one-size-fits-all approach to estate and asset protection in aged care. What works well for one family may not suit another. That said, there are several areas worth exploring with a qualified financial adviser.

Timing matters considerably. Decisions made before entering care, such as how to structure ownership of assets, whether to use a RAD or DAP, how to manage the family home, and whether any superannuation or investment restructuring is appropriate, can shape the financial outcome for years to come. Decisions made in haste, or under pressure, rarely produce the best results.

Planning early in respect of loss of capacity is also important. Ensuring Powers of Attorney (POAs) are in place allows important financial, legal, and personal decisions to continue to be made by trusted family members if capacity is lost.

For couples, additional planning considerations arise. Centrelink continues to assess couples jointly for pension purposes even when living apart for health reasons. This means that a spouse remaining in the family home can provide ongoing protection under the protected person rule, preserving both the home’s exempt status and the couple’s combined pension entitlements.

Superannuation also deserves attention. Depending on a person’s age and whether benefits have been drawn down, super can interact with both the income and assets tests in ways that affect aged care fees. Getting clarity on this interaction early is important.

How MiQ Private Wealth Can Help

Navigating the financial side of aged care is not something most families do more than once or twice. The rules are detailed, the timeframes are often short, and the decisions can be irreversible. At MiQ Private Wealth, we work with families across Australia to help them understand the aged care system, model different financial scenarios, and put strategies in place that protect both the person entering care and their wider family.

Our approach is always grounded in the individual circumstances of each family. We consider the full picture, including existing assets, superannuation, pension entitlements, estate planning goals, and family dynamics, to help families make decisions with confidence rather than uncertainty.

If you are beginning to think about aged care for yourself or a loved one, reaching out early is one of the most valuable steps you can take. The more time you have to plan, the more options you are likely to have available.

The Importance of Acting Early

One of the consistent patterns we see in aged care planning is that families who begin the conversation early have significantly more options available to them. Once a person has entered residential care, some planning strategies may no longer be available or effective. The structure of asset ownership, the treatment of the family home, and decisions about RADs versus DAPs all carry greater weight when made before entering the system rather than during or after.

Even for families where aged care still feels a number of years away, understanding how the system works can help shape broader estate planning decisions. Whether you are establishing a will, reviewing superannuation beneficiary nominations, or considering how to structure investment assets, aged care considerations are worth factoring in well before they become urgent.

Take the Next Step

Estate and asset protection in aged care is a topic where good advice can make a genuine difference. Contact MiQ Private Wealth today to speak with one of our experienced financial advisers. We are here to help you navigate this important stage of life with clarity and confidence.