How Do We Get an Aged-Care Accommodation Deposit Refunded After a Death?

Introduction

After a resident dies, a residential aged care provider must refund the refundable deposit balance to the estate, subject to authorised deductions. The refund period generally runs for 14 days after the provider is shown probate of the Will or letters of administration.

Families administering an estate in NSW need to know what documents to give the provider, how deductions and retention amounts may affect the balance, and how to follow up if payment is delayed. This article sets out a practical document checklist, an everyday refund example and the specific next step of contacting the home’s manager about any concern.

Interactive Tool: Check Your Aged Care Deposit Refund Status & Next Steps

What Are Refundable Accommodation Deposits & Contributions?

Types of Accommodation Lump Sums

Aged care accommodation costs can be paid as a refundable lump sum, daily rental payments, or a combination of both. The lump sums that may need to be returned to the resident’s estate include:

• Refundable Accommodation Deposit (RAD);
• Refundable Accommodation Contribution (RAC); and
• accommodation bond, if the resident entered care before 1 July 2014 and paid a lump sum.

Under Section 311 of the Aged Care Act 2024 (Cth) (‘Aged Care Act’), a registered provider must refund the refundable deposit balance when a resident dies. The balance may be reduced by authorised deductions, including applicable fees and retention amounts.

The Accommodation Payment Guarantee Scheme

The Australian Government guarantees payment of a refundable accommodation lump sum if an aged care provider becomes bankrupt or insolvent and cannot provide the refund. The guarantee covers residents of Australian Government-subsidised aged care services who paid a lump sum.

The guarantee also includes any interest due since the resident left care. The protection is known as the Accommodation Payment Guarantee Scheme and applies to RADs, RACs and accommodation bonds.

How Is the Refund Balance Calculated?

Allowable Deductions From the Deposit

Under Section 307 of the Aged Care Act, a registered provider must not deduct an amount from a refundable deposit balance unless the deduction is authorised by Section 307 or Section 308 of the Aged Care Act.

The refund is calculated by subtracting authorised deductions from the total lump sum. For RADs and RACs, authorised deductions may include:

• daily accommodation payments or daily accommodation contributions requested in writing and payable by the individual;
• other amounts agreed in writing; and
• amounts prescribed by the Aged Care Rules 2025 (Cth) (‘Aged Care Rules’).

Older accommodation bonds have separate deduction rules.

The Role of Retention Amounts

Under Section 308 of the Aged Care Act, a registered provider must deduct retention amounts from eligible RADs and RACs. The retention rate is 2% each year, calculated daily on the refundable deposit balance.

The retention rules apply mainly to residents who entered care on or after 1 November 2025 under the applicable accommodation arrangements. Under Section 308 of the Aged Care Act, retention is deducted no more than once a month and for up to five years in care. Deductions stop on death or permanent departure.

Everyday Example of a Refund Calculation

Before death, a resident has a refundable deposit balance of $200,000. The calculation proceeds as follows:

1. Daily retention amount: 2% × $200,000 ÷ 365 = $10.96 per day.
2. Retention deduction for a 30-day billing period: $10.96 × 30 = $328.80.
3. Balance available for refund: $199,671.20, before any other authorised deductions.

Each retention deduction reduces the balance used for later calculations. If the balance changes during a billing cycle, the provider must calculate separate daily amounts for each balance.

Does the Provider Need Probate or Letters of Administration?

Document Checklist for the Estate

The next step is to give the aged-care provider one of the documents that confirms who may receive the resident’s refundable deposit balance:

• proof of probate of the resident’s Will; or
• letters of administration for the resident’s estate.

Under Section 311(3)(a) of the Aged Care Act, the registered provider must refund the refundable deposit balance within 14 days after the day it is shown probate or letters of administration, and families dealing with that process can seek guidance from probate and estate administration lawyers.

The balance remains subject to any allowable deductions.

Exceptions to the Probate Requirement

A provider may refund the balance without probate or letters of administration if it accepts satisfactory alternative evidence of entitlement.

However, the provider still is entitled to request proof of probate of the Will or letters of administration. Those documents help confirm who is entitled to receive the refund and protect the provider when releasing estate funds.

When Should the Refund Be Paid & Is Interest Payable?

The 14-Day Refund Timeframe

The provider must refund the balance within 14 days after being shown probate or letters of administration, or accepting satisfactory alternative evidence of entitlement. The period starts with that event, not the date of death.

Base Interest Rate & Maximum Permissible Interest Rate

Under Section 313 of the Aged Care Act and the relevant provisions of the Aged Care Rules, interest is payable on the refundable deposit balance. The applicable rates are:

• Base interest rate (BIR): applies from the day after the resident dies until the refund is paid or the legislated refund period ends, whichever occurs first, subject to the applicable calculation rules; and
• Maximum permissible interest rate (MPIR): applies from the day after the 14-day period ends until the refund is paid, if payment is delayed beyond that period.

The BIR and MPIR are updated quarterly, and the applicable rates are determined under the Aged Care Rules.

What Can the Family Do if the Refund Is Delayed?

Discussions With the Aged Care Home Manager

The family should first speak with the manager at the aged care home about the delayed refund. The discussion can address two matters:

• whether the provider has received the required probate document or letters of administration; and
• whether any allowable deductions affect the amount payable.

Keeping copies of documents and records of communications can help the family track the issue.

Escalation to the Aged Care Quality & Safety Commission

If the concern cannot be resolved with the aged care home, the family can contact the Aged Care Quality and Safety Commission to make a complaint. The same step is available if a family member is not comfortable raising the concern directly with the home’s manager.

The complaint should identify the following:

• the resident;
• the aged care home;
• the date the provider received probate or letters of administration; and
• the refund amount expected.

Copies of relevant documents and communications can help explain the delayed payment.

Conclusion

An aged-care provider must refund the refundable deposit balance after a resident’s death once probate of the Will or letters of administration are shown, subject to authorised deductions under Section 307 and Section 308 of the Aged Care Act. Section 311 of the Aged Care Act sets the 14-day timeframe, while Section 313 of the Aged Care Act and the Aged Care Rules address interest after death, with a higher rate for overdue refunds.

If the refund is delayed or an estate dispute arises, contact LawBridge’s wills and estate lawyers for estate disputes for tailored legal guidance. Our probate and estate administration lawyers at LawBridge can help review the deposit balance, supporting documents and provider communications, so the estate can take the next step with a clear understanding of its position.

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