Wells and Secretary, Department of Health

[2016] AATA 528

Wells and Secretary, Department of Health [2016] AATA 528 (25 July 2016)

Division	GENERAL DIVISION
File Number(s)	2016/0991
Re	Rhonda Wells
APPLICANT
And	Secretary, Department of Health
RESPONDENT

DECISION

Tribunal	Deputy President Bernard J McCabe
Date	25 July 2016
Place	Brisbane

The decision under review is affirmed.

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Deputy President Bernard J McCabe

CATCHWORDS

AGED CARE ASSESSMENT – entitlement to assistance – value of assets attributed to Applicant – designated private trust – control test – where controlled private trust – whether Applicant attributable stakeholder – decision under review affirmed.

LEGISLATION

Aged Care Act 1997 (Cth) s 44.26A

Social Security Act 1991 (Cth) ss 1207P, 1207V, 1207X
Social Security (Attributable Stakeholders Attribution Percentages) Principles 2000 (Cth)

Trusts Act 1973 (Qld) s 62

REASONS FOR DECISION

Deputy President Bernard J McCabe

25 July 2016

1. These reasons consider how the Secretary should attribute the value of an interest in a deceased estate for the purpose of a Residential Aged Care Assessment. If the Secretary is right about the nature and value of the applicant’s interest in the estate, the applicant has a lower entitlement to assistance under the Aged Care Act 1997 (Cth) (‘Aged Care Act’) in the period covered by the assessment.

2. I am satisfied the Secretary’s approach is right, but it became clear at the hearing that the applicant’s position may well have changed since the date of the assessment. If a fresh assessment were made, it is likely she would be entitled to more assistance. Given the applicant had not accessed aged care facilities at the date of the hearing, there is limited value in reviewing the applicant under review. Even so, I will provide reasons for my decision so the applicant and the Secretary can understand my approach.

   What happened?

3. Ms Rhonda Wells suffers from a serious, long-term mental health condition. She receives the age pension and has lived in supported accommodation for many years. She has two sisters, Ms Gail Dalton and Juleene Kennedy. On 16 October 2015, QCAT[1] appointed Ms Dalton and Ms Kennedy to act as guardians for Ms Wells in relation to all personal matters. Ms Wells’ sisters have brought this application on her behalf.

   [1] The Queensland Civil and Administrative Tribunal.

4. The application arises out of the terms of the will of Ms Wells’ late aunt, Mary Ellen Blackburn. Ms Blackburn died in 2009. After providing for a number of specific bequests, the will instructed that the residue of the deceased estate be held in trust and divided into three parts. The first part was ultimately to be paid to Ms Dalton, and the second part was to be paid to Ms Kennedy. The third part was to remain in trust for Ms Wells. The text of clause 4(c) provided:

   The remaining one-third part or share to be held by my Trustees on trust for my niece, RHONDA KAY MARY WELLS of 45 Curlew Street, Toowong, Brisbane aforesaid, and I DECLARE that my Trustees are to invest such one-third part or share and to pay the net income from such investment to my niece, RHONDA KAY MARY WELLS, during her lifetime (free of all duties). I FURTHER DECLARE that if in the sole opinion of my Trustees such income is not sufficient to provide for the needs of my niece then my Trustees may in their sole discretion resort to the use of the capital of such one-third interest to make up any shortfall and my Trustees shall not be held liable for any loss occasioned to my residuary estate therefor. I FURTHER DECLARE that upon the death of the said RHONDA KAY MARY WELLS my Trustees shall pay the balance remaining of such one third part or share together with any unapportioned income hereof to such of them the said GAIL SALLY DALTON and JULEENE MARGARET ANN KENNEDY as shall then be living and if more than one in equal shares as tenants in common for their own use and benefit and use absolutely.

5. Pursuant to the terms of the will, Ms Dalton received an amount of $46,730.41 from the estate on 24 February 2010 in her capacity as trustee for Ms Wells. That money was subsequently invested and the investment is managed by the Public Trustee of Queensland. Since that time, Ms Dalton and Ms Kennedy have authorised payments of income from the trust to or for the benefit of Ms Wells, although there was also one small payment that reduced the capital.

6. That is a problem because – as at 1 July 2015 – an individual was not entitled to ‘fully supported residential status’ under the Act if they were attributed with assets worth in excess of $46,000. I note Mr McQuinlan, who appeared for the Secretary, pointed out at the hearing there was evidence suggesting the applicant’s assets had since fallen below the threshold and she may now be entitled to the maximum benefit regardless of the outcome of this application.

   The issue

7. The outcome of the case turns on whether and how the value of the assets of the trust is attributed to the applicant. The applicant’s representatives have obtained legal advice from lawyers who refer to general principles and the provisions of the Trusts Act 1973 (Qld) (‘Trusts Act’). They say a proper construction of the will suggests the applicant merely has a life interest in the corpus of the estate rather than an absolute interest. After referring to terms of the will, the lawyer explains in the letter of advice:

   ...there are no words in the clause to indicate that [the applicant] receives the share absolutely or that she may deal with the share personally. This means that [the applicant] would not be able to ‘give away’ the share in her life time or upon her death by her will. This share is not her asset, it remains in the deceased estate until such time as [the applicant] does and will then be divided between the remaindermen.

   The clause provides that [the applicant] is to receive the income from the investment of the share for her life. [The applicant] has no right to access the fund to distribute the income to herself and has no control over the share.

8. The lawyers went on to explain s 62 of the Trusts Act restricted the amount of capital that could be advanced to the applicant over her life to a maximum of $23,365. Only once an amount was advanced to her did she obtain an absolute interest in that amount.

9. The applicant’s representatives say that, at most, the applicant is entitled to the amount of capital that could be advanced to her over her lifetime. As that amount is well-below the cut-off, the applicant should prevail.

10. The Secretary says I should start by considering the rules in Part 3.18 of the Social Security Act 1991 (Cth) (‘Social Security Act’). (Those provisions apply in this case because they are incorporated under s 44-26A of the Aged Care Act.) Part 3.18 of the Social Security Act explains how the assets of designated private trusts should be treated.

11. Section 1207P sets out the test for determining whether a trust is a designated private trust. (Actually, the section assumes all trusts are designated private trusts unless they are excluded under the section.) The trust in the case is not excluded under s 1207P so it is regarded as a designated private trust. A designated private trust will be a controlled private trust in relation to a particular individual if that individual passes the control test in s 1207V. Section 1207V does not speak in terms of life interests or absolute interests, which are the concepts referred to in the legal advice. (The legal advice is not wrong – it just refers to the legal nature of the interest held by the beneficiary. That is fair enough for the purpose of the law of trusts, but it is not the relevant enquiry under the Social Security Act which, to some extent, cuts across the general law.) The legislation focuses instead on control as defined in that section.

12. The Secretary points out the terms of the will authorise the trustees to administer the trust for the benefit of the applicant and apply the corpus or income of the trust to make payments to meet the individual’s living expenses that would not otherwise be met. It was accepted the trustees have in fact made contributions towards the applicant’s living expenses out of the income of the trust and there has been at least one payment out of capital. That is enough to satisfy the control test in s 1207V by reasons of 1207V(2)(ca). That sub-section says a person passes the control test if:

    …it could reasonably be expected that the trustee of the trust would make an application of the corpus or income of the trust to the individual if the individual could not meet his or her reasonable costs of living…

13. A beneficiary under a trust does not have to have an absolute interest in order to control the trust within the meaning of s 1207V. I am satisfied the trust in question is a controlled private trust in relation to the applicant.

14. The next step is to determine the extent to which the assets and income of the controlled private trust should be attributed to the applicant given the applicant is, by reason of s 1207X(2) an attributable stakeholder in the trust unless the Secretary determines otherwise. As a general rule, 100% of the value of the assets of the trust will be attributed to an attributable stakeholder unless the Secretary determines otherwise.

15. Should the Secretary determine the applicant is not an attributable stakeholder or that less than 100% of the value of the trust assets should be attributed to her? Those questions are resolved having regard to the Social Security (Attributable Stakeholders Attribution Percentages) Principles 2000 (the Principles).

16. Section 6 of the Principles says one must consider whether there are circumstances likes those mentioned in the Principles which suggest the applicant should not be regarded as being in control. There is nothing unusual about the relationship between the applicant and the trust. She is the sole beneficiary, at least during her life. Her sisters administer the trust for her benefit. She is the only one to receive payments. There is nothing in the Principles that suggest there is anything unusual about this case which justify departing from the usual rule, which is that the applicant is an attributable stakeholder.

17. There is also nothing in the Principles to suggest the applicant should not be attributed 100% of the value of the assets, either. The relationship with the trust is conventional, as I have already explained. The limitations on the distribution of capital in s 62 of the Trusts Act do not make any difference. The applicant is still entitled to all of the income generated by those assets.

18. I do not see any basis for denying the applicant is an attributable stakeholder entitled to 100% of the value of the assets of the trust for the purposes of the Aged Care Assessment. Given those assets were, at the time of the assessment, in excess of the maximum amount, I must affirm that decision. But I repeat: the applicant’s position may well have changed. A fresh assessment may yield a quite different outcome.

    Conclusion

19. The decision under review is affirmed.

I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

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Associate

Dated 25 July 2016

Date(s) of hearing	17 May 2016
Advocate for the Applicant	Gail Dalton and Juleene Kennedy
Solicitors for the Respondent	Department of Human Services