Financial challenges for couples in second marriage
Second marriages may introduce additional financial complexities, particularly when balancing day-to-day expenses with implications for aged care funding. Even if couples don't share finances equally, Centrelink/DVA will assess their obligations as if they do.
Life is filled with twists and turns. Losing a spouse may be unfortunate, but finding love again is a stroke of luck. While a new relationship can provide companionship and support, it may also bring financial challenges, especially in terms of funding aged care and estate plans.
Some couples may opt to share their lives but prefer to keep finances separate to ensure inheritances pass to their own children and family. Decisions about how to split or share resources, which home to live in, or whether to purchase a new home become crucial. These choices must align with both life plans and estate plans, even though they may involve conflicting objectives.
From the perspective of Centrelink and aged care, two people living together are assessed as a couple. Regardless of ownership or personal financial arrangements, assets and income are combined and split equally.
Defining a couple involves considering five aspects:
- Financial aspects
- Nature of the household and how chores are shared
- Social aspects and presentation to family and friends
- Any sexual relationship
- Commitment to a permanent and ongoing intimate relationship.
No single factor definitively determines couple status. Assessors consider facts, interviews with involved parties, and input from friends and family to determine whether a couple shares lives or leads separate ones.
Changes in relationship status require notifying Centrelink/DVA and updating records, especially for those receiving benefits.
In the context of aged care, if either spouse needs access to services, the financial assessment follows the same rules as Centrelink/DVA. For couples, fees are based on half of the combined assets and income. This could result in one spouse needing the other's assistance to afford care fees. Deciding how this help is provided should involve financial advice to comprehend the implications fully.
For instance, using some assets to cover accommodation costs for a spouse moving into residential care will eventually be returned to the care recipient's estate, potentially benefiting the other family rather than the contributing spouse.
We offer advice to help navigate these rules and devise fair strategies for both partners, potentially minimizing family conflicts.