Aged Care Financial Planning
There are two key stages when health and circumstances make it more difficult to live safely and comfortably in your home.
Initially by accessing Home Care Services you may be able to extend your stay at home. These services can be Government funded or self-funded. We often work with groups who help to assess your needs and find appropriate services to meet your goals. Often simple strategies like modifications to the home, delivery of cooked food and daily assistance with personal care may enable someone to stay at home for many years.
However, once circumstances move to a point where it is difficult to stay at home safely, a move into an Aged Care Facility becomes necessary.
Ensuring you plan ahead financially to be able to afford both home care services and later on appropriate Aged Care is essential.
Helping you Manage your Aged Care Fees
A transition to an Aged Care Facility can be difficult to plan, both financially and emotionally.
The system is: -
- Can feel rushed and stressful
- The rules and thresholds change regularly
Quite often the decision is sudden, with a loved one in hospital and care needing to be arranged there and then.
The hospital is keen for the person to leave their beds and enter into care. Aged Care facilities are then keen to lock people into places and not have empty beds.
Often Aged Care facilities will look for the best financial deal when considering their waiting list. They often prefer clients who can pay for their room as a lump sum or "Bond", now referred to as a "refundable accommodation deposit - RAD". These are routinely $400,000 to $1,000,000, and then there are the daily care fees on top to be funded from ongoing cashflow.
Generally there is a perception that fast decisions need to be made - which Aged Care facility, how to come up with the RAD, whether to sell the family home urgently, the complexity goes on.
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 advice 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 may be thinking about care for yourself or your partner
- You may be the child or family member of someone who needs assistance
- You may be in a situation needing to balance differing family views
An initial family meeting is a great way to start click here to view an infographic that explains the benefits.
We are located in Carlton, Melbourne VIC, however have clients all over Australia.
Contact us on Ph: (03) 9349 1525 or email email@example.com
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 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 how to meet requests for RADs, advising on options to fund either lump sums or pay interest.
- Restructuring you or your loved ones financial position to minimise ongoing costs, tax if applicable and maximise the Estate.
- Ensuring that you have sufficient cash-flow to fund the aged care fees and costs, as well as other lifestyle costs such as personal care, health insurance and 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 for tax efficiency.
- 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.
- Feeling like you must sell the family home - this may not give the best outcome, seek our advice before making any decisions.
- Feeling rushed - avoid taking actions that could result in a loss of age pension and increased aged care costs (for example selling investments, 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
The rules are ever-changing and depend on the date of entry into an Aged Care Facility.
Decisions are best made when they encompass all goals of the person moving into care including financial decisions such as minimising costs, keeping the family home for future inheritance or allowing a family member to continue living there.
Sometimes renting out the family home can be beneficial even if just for the first year while settling into your new accommodation.
Even if selling the home is the right decision, the Government recognises this is often a 6 month process of cleaning up the property for sale, selling and settlement period. Having a plan on how to fund the interest costs on the RAD until it can be paid is essential. This is especially the case when selling a home within a Retirement Village which can routinely take a much longer period.
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.
The Age Pension is also impacted after 2 years of not living in the former family home, again it's essential to understand the initial fees you would pay and then what would occur after 2 years.
The Age Pension could also be affected upon sale of the family home where surplus money is released, it's essential to plan ahead for how those funds are structured and invested.
Important information when choosing an aged care facility:-
- See if you can look at nearby locations BEFORE a health emergency, when it can be considered without stress
- Check the www.myagedcare.gov.au website, type in your post code, and see facilities in your area
- If you need help with a placement we can recommend services who specialise in placements
- Always obtain a copy of the contract from the Aged Care Facility and ALWAYS have it checked by a specialist Elder Care Lawyer – we can refer you
- Never provide financial information until you have spoken to your financial adviser
- You don’t need to rush to pay a RAD
- Refuse to be rushed – you have time