Aged Care Financial Planning

A transition to aged care can be difficult to plan, both financially and emotionally.

Quite often the decision is also sudden, with a loved one in hospital and care needing to be arranged there and then.

When trying to choose the best care, ensuring that you make the right decision will depend on a multitude of complicated factors.  

We are aged care specialists for self-funded retirees, here to help you make the right financial decisions to optimise you or your loved ones situation and avoid the key traps.

If you are in a position to pre plan for this next phase of life, start planning early.  Most importantly it is essential that you seek advice prior to entering into an aged care facility agreement.

We can project manage and be the facilitator between the parties, you and your children.

We are located in Carlton, Melbourne VIC, however have clients all over Australia.

Contact us on Ph: (03) 9349 1525 or email reception@unifiedfs.com.au 

Key tips when starting out

We can help you through each stage

• Determining whether you or your loved one are eligible to enter into an aged care facility and what level of care will be needed (such as high level care – also known as a nursing home). This is established via assessment by an aged care assessment team (ACAT).

• Liaising with specialist advocates who can help source the appropriate location and facility.

• Current position - gaining an understanding of the aged care fees applicable to your aged care facility – upfront and ongoing.

• The impact that entering an aged care facility on you or your loved one’s financial situation and age pension entitlements.

• Reviewing and possibly restructuring you or your loved ones financial position to minimise upfront and/or ongoing costs, tax if applicable and maximise the Estate.

• Ensuring that you have sufficient cash-flow to fund the aged care fees and costs (for example ongoing maintenance of the former family home).

• Determining how long your money will last and create a plan to improve this.

• Determining the order of investments to be sold to fund costs to minimise tax. 

• Revising your estate plans and important legal documents (such as an enduring power of attorney) that have been granted to your immediate family, close relative or friend.

Key traps

• Avoid selling the family home before seeking our advice,

Paying certain aged care fees and renting out the former home could deliver a better outcome than selling it. The overall benefits of not selling may include reduced aged care fees and increased age pension entitlements.

Please read further on “Keeping and renting the family home” below and speak to us before acting.

• Avoid taking actions that could result in a loss of age pension and increased aged care costs (for example gifting assets outside Centrelink gifting rules), again speak to us before acting.

• Remember to consider the impact that entering an aged care facility might have on your or your loved one’s financial estate, to be passed on to the next generation.

Keeping and renting the family home

Retaining and renting the family home can provide an exemption for social security purposes, provided:

• the resident is paying an accommodation charge to their high level aged care facility
• the resident has not paid an accommodation bond in full, and
• the resident is paying interest on the outstanding amount of the accommodation bond via periodic payment to the low level aged care facility
• the former family home is retained and rented out.

If these criteria are satisfied, the asset value of the former family home and the income (rent) will be exempt from both age pension assessment and aged care fees (income tested fees).

When retaining and renting the former family home, it is important to consider the income tax impact (as the rental income is assessable for tax purposes), the capital gains implications and the cost of ongoing maintenance and renovations.