Refundable Accommodation Deposits and Deceased Estates: What Executors Need to Know

What the refundable balance is, and what this article covers

A RAD is a lump sum paid to a registered provider for the resident's accommodation; a RAC is the equivalent lump sum where the Commonwealth contributes to the accommodation cost. Residents who entered care before 1 July 2014 may instead have paid an accommodation bond, which has its own rules. All of these sit alongside, and are separate from, the ongoing fees the resident paid for care and daily living.

The accommodation pricing regime, the choice between lump sum and daily payment, and the current fee settings are covered in our guide to aged care costs, RAD, DAP and the fee reforms, including the approval threshold above which a provider needs pricing approval before charging a room price. That threshold governs what a provider may charge a new resident, not what an estate is entitled to be refunded, so it is not repeated here. If the underlying agreements themselves are in question, see our aged care service agreements checklist.

The refund obligation on death

Section 311 of the Aged Care Act 2024 (Cth) requires a registered provider to refund the refundable deposit balance where the individual dies. The balance must be refunded in the manner prescribed by the Rules (r 311-5 — cash, cheque, bank cheque or electronic transfer), and the refund period for a death is set by s 311(3) and r 311-15. A separate refund period applies under r 311-20 where the provider ceases to deliver ongoing services and has not transferred the balance to another provider, and s 311(4) deals with a resident who moves to another home during life.

Where the resident has died, the balance must be refunded:

• within 14 days after the day on which the provider is shown the probate of the Will or the letters of administration of the estate; or
• where the provider is not shown a grant but is shown other evidence that satisfies it that the balance is to be refunded to a person, within 14 days after the day that evidence is shown (r 311-15).

The date of death does not trigger the 14-day period. Presentation of the grant, or of other satisfactory evidence, to the provider triggers the refund obligation; the first day of the 14-day refund period is the day after that presentation; and payment is due by the end of that 14-day period. The day of presentation is not itself day one. That distinction matters both for diarising the payment deadline and for calculating interest.

What amounts to “other satisfactory evidence” is fact-specific and reflects the risk the provider carries if it pays the wrong person. A grant is commonly required where the balance is substantial. A death certificate, a copy of the Will, a statutory declaration, an indemnity or a small-estate form may be accepted in some cases, but none of those can be assumed to be acceptable. The practical step is to ask the provider in writing, at the outset, what it will accept and to keep that answer on the file.

Interest: how the BIR and MPIR run

Interest is dealt with separately from the refund obligation, under s 313 of the Act and rr 313-5 and 313-10 of the Rules. Interest is not confined to late refunds:

• the base interest rate (BIR) accrues on the refundable deposit balance from the day after the refunding event — for a deceased resident, the day after death — until the earlier of payment and the last day of the legislated refund period;
• if the balance is still unpaid at the end of the refund period, the maximum permissible interest rate (MPIR) accrues from the following day until payment;
• MPIR replaces BIR for the late period — the two rates do not accrue concurrently for the same days;
• the BIR used is the rate current on the first day of the refund period, which for a death is the day after the provider is shown the grant or other satisfactory evidence;
• the MPIR used is the rate for the day after the last day of the refund period; and
• authorised deductions are made before interest is calculated on the balance.

The Department of Health, Disability and Ageing publishes the current and previous BIR and MPIR, which are set quarterly, together with guidance on which rate applies to which calculation. As at this article's review date of 15 September 2026, the BIR is 3.25% and the MPIR is 8.43% for the quarter 1 July to 30 September 2026, and the published schedule already records a BIR of 3.75% and an MPIR of 8.51% for 1 October to 31 December 2026. Because the rates change each quarter, the applicable rate is fixed by the legally relevant date — the first day of the refund period, or the day after the refund period ends — and not by the date an executor happens to read this article or the provider's statement. Verify the rate for the particular days from the Department's published schedule. The MPIR is also used for other purposes, including converting an accommodation price into a daily payment; the rate relevant to that calculation is fixed by different dates and is not necessarily the rate that governs refund interest.

The sequence for a deceased resident is therefore:

1. the resident dies — the refunding event;
2. BIR interest begins to accrue on the balance from the following day;
3. the provider is shown the grant, or other evidence satisfying it who is entitled — this triggers the refund obligation;
4. the 14-day refund period begins on the day after that evidence is shown, and payment is due by the end of that period;
5. if payment is made within the period, BIR interest runs from the day after death to payment; or
6. if the balance is unpaid at the end of the period, BIR interest stops at the last day of the period and MPIR interest runs from the following day until payment.

That timeline is illustrative of how the periods fit together. The actual figures depend on the balance after authorised deductions and on the published rates for the particular days, and should be calculated on the provider's statement rather than estimated.

Authorised deductions and the resident's fee arrangements

A provider may deduct only amounts authorised by the Act and the Rules. Unpaid fees and “extras” are not automatically deductible from the lump sum: the question is always whether the particular amount is one the legislation permits to be taken from the balance. Rule 309-5 prescribes the order in which authorised deductions are made.

Before reconciling anything, identify which fee and accommodation arrangements applied to this resident. Entitlements and deductions differ across cohorts, and using the wrong cohort is one of the more common sources of error. At an executor level, keep the following distinct:

• Daily accommodation payment (DAP) or daily accommodation contribution (DAC) already deducted during life. Where the resident agreed that daily accommodation amounts be drawn from the lump sum, those deductions have already reduced the balance. They are history, not a further deduction.
• DAP or DAC still outstanding at cessation of services. Rule 307-5 prescribes any amount of daily payment outstanding on the day the provider ceases to deliver ongoing services as deductible from the balance.
• Other amounts the resident agreed in writing could be deducted, to the extent the Act authorises that deduction.
• Retention, where the retention regime applies — see the next section.
• The basic daily fee and any agreed service charges, which are ordinarily paid as fees rather than taken from the lump sum unless a deduction was agreed and is authorised.
• The hotelling contribution and non-clinical care contribution for residents on the arrangements that began on 1 November 2025.
• The means-tested care fee for residents who remain on the arrangements that applied from 1 July 2014.
• Accommodation bonds paid before 1 July 2014, for which different deduction rules apply again.

Use the defined term that matches the resident's arrangements rather than a general label. The request to the provider should be for the statutory basis of each deduction line, not merely a total.

RAD and RAC retention

Where the retention regime applies, retention is calculated daily at the fixed rate of 2% per annum on the reducing RAD or RAC balance, and no deduction may be made after five years. Under s 308 of the Act it is deducted during the resident's stay in care, and r 308-10 permits the provider to deduct a retention amount outstanding on the day it ceases to deliver ongoing services before refunding or transferring the balance. Whether retention applies at all turns on the resident's entry history and fee cohort:

• it applies to eligible residents contributing through a RAD or RAC who entered the aged care home on or after 1 November 2025 and were on the 1 November 2025 fee arrangements when entering, including relevant opt-ins;
• it can also apply to a person entering under the 1 July 2014 fee arrangements who first entered residential care after 31 October 2025, or who re-entered after a break in residential care of more than 28 days after 31 October 2025;
• it does not apply to residents under the 1 July 2014 accommodation arrangements who pay a RAD or RAC merely because the payment is made after 1 November 2025;
• it does not apply to residents on the 1 November 2025 arrangements who were under the pre-1 July 2014 accommodation arrangements as at 31 October 2025;
• r 308-12 prescribes the classes of individuals for whom retention amounts must not be deducted: the post-2014 residential accommodation class, the post-2014 flexible accommodation class, and the class of individuals who have ceased to be in the pre-2014 accommodation class;
• fee arrangements and accommodation classes are distinct concepts, so the executor should check both the resident's entry and re-entry history and the governing arrangements before accepting a retention line;
• it must not continue to accrue after the resident dies or permanently leaves care merely because the provider still holds the balance; and
• the resident cannot be required to top up the deposit to make good amounts retained.

The practical step is to identify the resident's precise fee and accommodation cohort from their entry history, any break in care and the signed agreements, and then test the retention line on the provider's statement against the rules for that cohort.

The broader retention regime, and how it interacts with accommodation pricing, is covered in our aged care costs and fee reforms guide.

When charging ceases and the final reconciliation

On death, or on permanent departure, the provider ceases to deliver ongoing funded aged care services and must perform a final reconciliation of the resident's account. Two things need to be kept apart in that reconciliation:

• amounts already deducted from the lump sum during the resident's stay, which have reduced the balance the provider holds; and
• amounts still lawfully owing at cessation of services, which may be deducted from the balance only if the Act and Rules authorise that deduction.

Retention must not continue after permanent departure or death. Where a ledger shows charges of any kind continuing past the cessation date, ask for the statutory authority for each of them.

Is the refund an asset of the estate?

Ordinarily the refundable balance is a debt owed by the provider to the resident, and after death it is recoverable by the estate's legal personal representative. It does not pass by survivorship, and it does not pass to a person merely because that person was recorded as the resident's representative or nominee for care purposes.

Payment by the provider to the estate does not, however, settle beneficial ownership. A person who funded the deposit may assert a loan, a trust or resulting trust, a right to reimbursement, or another contractual or equitable claim against the estate. Questions of that kind arise more readily where the money came from joint funds, from the proceeds of sale of the family home, from a transaction managed by an attorney, or from money advanced by a child. The representative's task is evidentiary before it is doctrinal: identify where the money came from, what was documented at the time, and what the surviving records show. The refund should not be distributed until material ownership and creditor claims have been assessed. Where a lifetime transaction is in question, our article on elder financial abuse and legal options covers the issues that arise.

Probate, the estate inventory and where the money goes

A person named as executor can notify the provider of the death, identify themselves, and request the ledger and statements before a grant issues. The provider may nonetheless reasonably require a grant, or other evidence satisfying it who is entitled, before releasing a substantial balance. Whether a grant is needed for the estate as a whole is a broader question, addressed in our probate in Victoria guide, our executors' guide to estate administration and our note on executor duties in Victoria.

For the estate records, the balance at the date of death should ordinarily appear in the asset schedule or inventory as a receivable from the provider, subject to final reconciliation. Distinguish three components:

• the capital balance attributable at the date of death;
• lawful post-death adjustments and authorised deductions; and
• BIR or MPIR interest accruing after death.

The refund should be paid into an estate bank account controlled by the authorised executor or administrator, not into a beneficiary's or family member's personal account. Where letters of administration have issued, the administrator is the legal personal representative, and correspondence with the provider should reflect that rather than assuming there is an executor.

Reconciliation checklist

Work through the balance in this order, and keep each line separately evidenced:

1. Opening lump sum. The RAD, RAC or bond as paid, and the date it was paid.
2. Deductions during the stay. Any DAP or DAC drawn from the lump sum, and any other amounts deducted under a written agreement.
3. Retention, if applicable. Amounts retained, the daily calculation applied, the balance to which it was applied, and the date retention stopped.
4. Final authorised amounts at cessation. Daily payment outstanding on the cessation day and any other authorised amount, with its statutory basis.
5. Capital balance to be refunded. The net figure after authorised deductions.
6. BIR interest. From the day after death to the earlier of payment and the last day of the refund period, at the rate current on the first day of the refund period — the day after the grant or evidence was shown.
7. MPIR interest. Only if the balance was unpaid at the end of the refund period, from the following day until payment, in place of BIR for those days.

Documents to request from the provider

• the accommodation agreement and any variations, showing the agreed accommodation price and payment method;
• the service or resident agreement in force at the date of death (a transitional resident agreement may still apply for residents who entered before 1 November 2025);
• the resident ledger and account statements from entry to the date of death;
• the lump sum statement showing the opening amount, deductions, retention and current balance;
• the final reconciliation statement to the cessation day;
• the statutory basis for each deduction line;
• the provider's written statement of what evidence it requires before releasing the balance; and
• the provider's interest calculation, showing the rates and dates used.

Executor checklist: issue, why it matters, what to check

Red flags on the provider's statement

• retention deducted for a period after the date of death or permanent departure;
• lump sum deductions with no identified statutory basis or written agreement;
• fees applied from the wrong cohort — for example a means-tested care fee for a resident on the 1 November 2025 arrangements, or a hotelling contribution for a resident who remained on the earlier arrangements;
• no interest calculated at all, or a single rate applied across both periods;
• the same amount appearing both as an earlier deduction and as an amount still owing;
• payment proposed to an individual beneficiary or family member rather than the estate; and
• a refusal to identify what evidence will be accepted, or to date the day the evidence was shown.

Tax and accounting

Repayment of the capital balance is ordinarily the realisation or collection of an estate asset rather than income of the estate. Interest accruing after death at the BIR or MPIR may constitute estate income for the period of administration, and should be referred to the estate's accountant or tax adviser with the provider's calculation attached. Retain the deduction detail and the final provider statement for the estate accounts.

Treatment depends on the circumstances of the particular estate, and this article does not give tax advice. Parke Lawyers advises on the legal and estate-administration issues and coordinates with the estate's accountant on tax and financial questions. Our note on estate tax for executors sets out the general framework.

Delay, disputed deductions and provider failure

Where the refund is not paid, or the deductions do not reconcile, a structured escalation is usually more effective than repeated general chasing:

1. request the resident ledger, accommodation agreement, service or resident agreement, final statement and the statutory basis for each deduction, in writing;
2. identify the applicable fee and accommodation cohort, so the reconciliation is tested against the right rules;
3. calculate the refund period, which begins the day after the evidence was shown, and the BIR and MPIR interest for the relevant days;
4. raise the issue through the provider's internal complaints process, in writing, with the reconciliation attached;
5. where that does not resolve it, complain to the Aged Care Quality and Safety Commission; and
6. obtain legal advice where deductions are disputed, where a substantial balance has been paid to the wrong person, where the delay is significant, or where beneficiaries are in conflict about the money.

On the complaints pathway generally, see our guide to aged care complaints for families.

Where a provider is insolvent or otherwise unable to refund, the Aged Care (Accommodation Payment Security) Act 2006 (Cth) provides the Commonwealth guarantee arrangements — commonly described as the Accommodation Payment Guarantee Scheme. That Act allows insolvency event and default event declarations to be made, refund declarations to be given, and refund amounts including interest to be paid by the Commonwealth, with recovery rights transferring to the Commonwealth. It is a regulatory process with its own requirements and timeframes, and is distinct from an ordinary late-payment dispute with a solvent provider. Where provider failure is a real possibility, obtain advice promptly rather than continuing to correspond.

Where the resident had moved into aged care from a retirement village, the village exit entitlement is a separate calculation with its own timeframes; our article on what happens when a retirement village resident dies covers that side.

Estate accounts and beneficiary communication

The refund typically appears in the estate accounts as a receipt into the estate account, with the reconciled deductions and interest shown against it. Executors and administrators have a duty to keep beneficiaries reasonably informed. Where the refund is a significant part of the estate, providing beneficiaries with the provider statement, the reconciliation and the net amount received puts the position on the record and gives the accountant the same material for the estate accounts or any estate return.

When to seek legal advice

Consider advice where the balance is substantial, where the provider disputes or delays the refund, where deductions or retention cannot be reconciled to the agreements, where the provider requires a grant and the estate is otherwise being administered without one, where someone other than the deceased funded the deposit, or where beneficiaries raise concerns about the aged care arrangements or the handling of estate funds.

How we help

Our probate and deceased estates team and retirement living and aged care team work together on refundable deposit balances and related estate-administration issues — provider correspondence and reconciliation, probate and administration applications, estate accounting inputs, beneficiary communication and, where necessary, disputes. We coordinate with the estate's accountant on tax and financial questions.

Frequently Asked Questions

Authoritative sources

• Aged Care Act 2024 (Cth) — current compilation
• Aged Care Rules 2025 (Cth) — current compilation
• Department of Health, Disability and Ageing — refunding lump sums in residential aged care
• Department of Health, Disability and Ageing — RAD and RAC retention
• Department of Health, Disability and Ageing — current and previous BIR and MPIR
• Aged Care (Accommodation Payment Security) Act 2006 (Cth) — current compilation
• My Aged Care — aged care home accommodation refunds and the guarantee scheme
• Aged Care Quality and Safety Commission — making a complaint