Aged care CEO challenges Australia's $4 trillion inheritance mindset

Last year I sat with a couple in their early seventies who had done everything right. Paid off the house. Built their super to just over $600,000 between them. Raised three children who all turned out fine. They wanted to update their wills.

The husband mentioned, almost in passing, that his mother was in residential care. The fees were $550,000 for a Refundable Accommodation Deposit plus $150 a day in basic daily fees. His super balance had dropped from $380,000 to just under $200,000 in eighteen months.

Then his wife said something I hear in every third meeting: 'We promised the kids the house. I don't know how we're going to keep that promise now.'

That tension sits at the centre of a debate Tracey Burton, CEO of Uniting NSW and ACT, brought into sharp focus this month. Uniting runs 70 residential aged care homes, 90 retirement villages, and home care services across the state. Burton sees the funding gap from both sides. She knows what care costs. She also knows that 200,000 Australians are on waiting lists for in-home care, and that full pensioners are being asked to pay co-payments they cannot afford for services as basic as help with showering.

This idea that superannuation is intergenerational and for passing on to your kids. It's not. It is there to help you have the best retirement you can have, so spend it on what you need, and if that's the aged care system, then spend it there.

— Tracey Burton, CEO Uniting NSW and ACT

The inheritance assumption

Burton is right about the policy design. The Superannuation Industry (Supervision) Act 1993 defines the purpose of super as providing income in retirement. The tax concessions exist so you can fund your own retirement, not so you can leave a larger estate to your children.

But policy design and human behaviour diverge. A 2023 Productivity Commission report found that many retirees deliberately preserve their super and draw down at the minimum rate required. They live off the age pension and keep the super for bequests or, more often, for an undefined 'emergency' that never comes.

The numbers show the gap. ASFA estimates a comfortable retirement requires about $618,500 for a couple at age 66. Average super balances for Australians aged 70-74 are $449,540 for women and $501,785 for men. Many people have enough to fund some care. The question is whether they will.

In my practice I saw the same pattern repeatedly. Adult children assumed they would inherit the family home. Parents assumed the children knew they might need to sell it. Nobody had ever said this out loud.

The system cannot fund everyone

Burton's argument lands harder when you look at the aged care waiting lists. The federal government is spending $4.3 billion on its Support at Home program and creating 83,000 additional places. That sounds substantial until you consider the 200,000 people currently waiting.

Labor's new aged care laws came into force in November 2025. The federal aged care taskforce that reported in 2024 recommended that wealthier Australians should pay more toward their care. The logic is simple: taxpayer funds should go to those who need them most.

Uniting has proposed that full pensioners receive automatic exemption from co-payments. Burton estimates this would cost about $50 million a year. Without it, some pensioners are going without basic services because they cannot afford even small contributions.

A culture change is needed. We have to shift that thinking that the system should pay for all of our care, because it is going to be limited by the amount of money the government can afford to put into it.

— Tracey Burton

The conversation nobody wants to have

Here is what I learned after twenty-five years drafting wills and powers of attorney. Most family conflicts about money happen because of assumptions that were never tested.

The daughter who provides daily care for an ageing parent assumes she will receive more from the estate. The son who lives in Perth assumes his share will be equal. The parent has told neither child anything specific. When the will is read, someone feels betrayed.

Aged care funding works the same way. Parents assume their super and the family home belong to them to spend as needed. Children assume those assets will eventually flow to them. Both assumptions can be true in sequence, but the timing matters enormously. A parent who enters residential care at 75 and lives to 92 will spend far more than one who dies at 78 in their own home.

The demographic numbers make this worse. Australia's population over 65 is projected to double over coming decades while the working-age population as a share of the total falls. The tax base that funds aged care will shrink relative to the demand.

What the law actually says

Super death benefits follow specific rules. If you have a spouse or dependant at death, your super can pass to them tax-free. If it goes to adult children who are not dependants, they may pay tax of up to 32% on the taxable component of the benefit. This creates an incentive to spend super during your lifetime rather than preserve it for inheritance.

The means test for aged care considers both assets and income. Your principal home may be exempt while you or your spouse lives in it, but super in accumulation phase counts toward the assets test. Different states also have different rules about how aged care costs can be recovered from estates.

None of this matters if families cannot talk about it. Burton acknowledged the difficulty: 'I think it will be a hard thing to shift, because this mindset some people have, saying "I've paid my taxes all my life and I deserve this." It's ingrained.'

A question for the dinner table

The couple I mentioned at the start eventually had the conversation with their children. It was not easy. One son had assumed he would receive the proceeds of the family home split three ways. One daughter had assumed she would receive more because she lived nearby and helped her parents weekly. The third child had assumed nothing and was surprised the conversation was happening at all.

They reached an agreement that satisfied no one completely, which is usually how family money conversations go. The parents would spend what they needed on their own care. Whatever remained at death would be split equally. The daughter who helped would receive a specific bequest to acknowledge her time, which the others accepted.

I have a question I suggest for families who have not had this conversation. It goes like this: 'If Mum or Dad needed residential care that cost $300,000 over five years, where would that money come from?' The answers reveal everything.

Some families assume the government will pay. Some assume the house will be sold. Some assume siblings will contribute according to their means. Some have genuinely never thought about it. All of these assumptions matter, and none of them can be tested until someone raises the question.

Burton is asking Australia to change its culture around super and inheritance. That may take a generation. In the meantime, individual families can start by talking about what they actually expect.

The pension age is 67. Average life expectancy at 65 is about twenty more years. That is a long time to avoid a difficult conversation.