A letter arrives a few weeks after a parent or partner dies in residential aged care. It is the home’s final account, and it lists fees still owing for the period before death, sometimes a sum running into thousands of dollars. For a family already dealing with a funeral and a mountain of paperwork, the natural question is whether that bill lands on them personally.
It generally does not. Outstanding aged care fees are treated as a debt of the deceased person’s estate, not a personal debt of their children or next of kin, unless a family member actually signed a personal guarantee with the facility. Understanding that distinction can take a lot of worry off a family’s plate at an already difficult time.
What happens to fees still owing when someone dies in care?
When a resident dies, any aged care fees that had built up are ordinarily settled from their own funds or their estate, as part of the broader process of administering that estate. This runs alongside other estate matters, including a final tax return, and is managed by whoever is recognised as the deceased’s legal personal representative.
There is no single Australian government-set dollar figure for fees charged specifically in the period after a resident’s death. Aged care fees and contributions are instead set out in each individual home’s contract, within the Support at Home and residential aged care fee frameworks, which means the exact terms can differ from one facility to the next.
When could a family member be asked to pay personally?
The exception to all this is a personal guarantee. If a family member signed an agreement with the aged care facility accepting personal responsibility for the resident’s account, that guarantee can make them liable in their own right, separate from the estate.
Without a signed guarantee, responsibility does not automatically pass to children or other relatives. Overseas elder law guidance, reviewed for comparison rather than as Australian authority, puts the underlying principle plainly: “children are not responsible for their parents’ bills, medical or otherwise,” unless they personally signed on for the facility’s terms. The same logic applies here, even though the dollar figures and contract language are different.
What about the tax return for someone who has died?
Separately from the aged care account, a “date of death” tax return may need to be lodged with the Australian Taxation Office (ATO) for the income year in which the person died. This is distinct from any later trust tax return lodged for the deceased estate itself, and income received after death is treated separately, for tax purposes, from income the person received while alive.
A date of death return can only be lodged once the ATO has been notified of the death and the legal personal representative is recorded on its systems, which is why estate administration can take some time to get moving. Where a property or similar asset passes to a beneficiary under a will, intestacy or a deed of arrangement, it generally transfers without immediate capital gains tax consequences for that beneficiary.
Does a bereavement payment have anything to do with the aged care bill?
A surviving partner may separately be eligible for a bereavement payment through Services Australia, calculated over a 14-week period starting from the day the partner died. Eligibility and the amount depend on individual circumstances, the relationship to the person who died, and when the death is reported.
That payment sits apart from the aged care account entirely. One is income support for the surviving partner, the other is settlement of a debt attached to the deceased’s own estate, and the two should not be confused when working through what needs doing first.
Where to check the actual figures
Overseas jurisdictions handle this differently. In the United Kingdom, some care homes have historically charged for periods of up to 28 days after a death, and a UK regulatory review found practices varied significantly between homes, noting it was “not always clear why residents were being charged for services they were unable to receive because they had passed away.” Those figures relate to a different country’s rules and should not be read across to an Australian contract.
For an Australian facility, the applicable terms sit in the individual contract signed when the resident was admitted. My Aged Care, on 1800 227 475, can explain aged care costs and fees and help check what a specific contract says. The Australian Taxation Office, Services Australia and MoneySmart all publish the current rates, thresholds and payment rules relevant to a deceased estate, and are worth checking directly for up to date figures before any payment is made.
For a family sorting through an aged care account after a death, the practical position is reassuringly simple: unless someone put their own name on a guarantee, the bill belongs to the person who has died, to be settled from their own funds or estate, not pulled from a grieving family’s own pocket.
