Under a proposed proposal to slap an effective death tax on seniors to finance treatment, Baby Boomers may be forced to sell the family home when they die to pay for aged care expenses.
During his speech today at the Royal Commission on Aged Care, former Treasurer Peter Costello urged the Morrison Government to consider an extended pensioner loans programme.
Under the plan, the option of taking out a loan secured against the family home would be offered to seniors, which would then be sold if they died or other properties were liquidated.
Although reverse home loans are already being provided by some banks, Mr. Costello called for discussion on extending a pension loan scheme to use the family home as an asset that could be sold to recover costs when a retiree dies.
“I mean, financial products that can allow people to raise accommodation bonds against the family home, which is generally their greatest asset, I think there’s a much more scope for them and I think the Government could assist there,” Mr Costello said.
“The Government has a thing called the Pension Loan Scheme which it says is available. The private sector has what is called a reversible mortgage or equity drawdown mortgages.
“But I do think, you know, this is a classic area where those people that do use residential care and do have assets should be asked to make a contribution and guaranteed a return of their deaths.”
“Even today, if you’re asked to put up an accommodation bond, you can raise that bond with your own house as security,” he said.
“I mean, the point I’d make is that I think people should do it knowingly and in advance and there should be products that allow them to do that during their lifetime. If you come around and try to take their assets after they’ve died, I think you can expect to run into a lot of opposition there.”