Moving into residential aged care can involve many decisions, from finding the right care service to understanding fees, accommodation payments, investments and estate planning.
Having an adviser involved can help you and your family understand the options available and work through the financial decisions that come with aged care.
Setting Your Priorities
As your adviser we can:
- Help you identify what is important and achieve your goals and objectives.
- Help you and your family understand the range of care options and how the aged care system works.
- Outline the steps ahead to help you find and access the right type of care.
- Act as a central reference point for clear and relevant information about aged care and how your finances are affected.
A Clear Plan
After her mother’s fall, Mary needed to find residential aged care quickly. With no knowledge of the cost or complexities of the aged care system, Mary met with her adviser and was able to gain a clearer understanding of the decisions and actions that needed to be taken right away to secure a place for her mother.
Timely Information
As your adviser we can:
Provide information to help you understand your options and make informed decisions as your circumstances change.
The aged care service that Norma and her children, Ann and Tom, selected required a Refundable Accommodation Deposit (RAD) that exceeded her savings.
Ann and her brother Tom had different views about whether to sell their parents’ home to pay the balance. Tom did not want to sell because he did not want to lose his parents’ hard-earned money. He wanted to look for another service with a cheaper RAD.
During a family meeting, their adviser explained how RADs work. Once Tom understood that his parents’ money was not at risk and would be fully refundable when Norma no longer needed care, the family was able to reach an agreement that provided comfortable accommodation for their mother and gave everyone greater peace of mind.
Financial Review
As your adviser we can:
- Review your financial situation to help provide solutions that meet your goals and objectives.
- Help you evaluate what you can afford so you can focus on finding a suitable aged care service.
Finding Solutions
Joe had worked hard to pay off his home, which was now also home to his son and his family. When Joe needed to move into aged care, he was reluctant to sell his home.
Joe and his son could not initially see another option for paying the RAD required to secure a place in care.
Fortunately, Joe’s adviser identified that he could afford to keep his home by paying a partially refundable accommodation deposit and arranging for the service provider to take the Daily Accommodation Payment (DAP) from the RAD, while his son contributed some rent.
This enabled Joe to access the care he needed while managing his cash flow and allowing his son to continue living in the family home.
Estimating Aged Care Fees
As your adviser we can:
- Explain the range of fees and how they are calculated.
- Help estimate what you may need to pay.
- Consider how different financial decisions may affect your aged care costs.
Clarity Amidst Confusion
When George looked into aged care fees, he discovered a confusing mix of variable costs and couldn’t get a clear understanding of what he might have to pay.
His adviser worked through the calculations and showed George how different investment decisions could affect his fees.
As a result, George could see the cost of care under different scenarios and understand what he could afford.
Options to Pay for Accommodation
As your adviser we can:
- Determine the financial implications of keeping or selling your home.
- Evaluate options and strategies for your accommodation payment.
- Review potential strategies to maximise your Age Pension and minimise aged care fees.
Confidently Make Informed Decisions
To secure a place in residential care, Alice had been asked to pay a $400,000 RAD. Alice had only $82,020 in the bank, so selling her home appeared to be the only option.
Her home had been valued at $560,000 a couple of years earlier, but the property market was slow and her agent advised her not to expect more than $500,000.
Alice consulted an adviser who outlined the options of selling or keeping her home and how each option could be structured.
The financial analysis showed that she could maintain surplus cash flow under either scenario. This gave Alice greater flexibility to take her time when selling the house and seek a suitable price.
RADs Can Be the Solution, Not the Problem
Amy was concerned about the substantial RADs being requested by residential care services in her area and initially focused on finding a service with a lower RAD.
Her children encouraged her to speak with their financial adviser, who showed her that after selling her house, paying a higher RAD could potentially help preserve more of her Age Pension while maintaining her financial security.
This highlights why it is important to consider the overall financial impact of an accommodation payment rather than looking only at the size of the RAD.
Sell the Right Assets
Sylvia owned an investment property, her home, an account-based pension and a small amount of cash in the bank.
She needed to sell assets to help pay for her aged care accommodation.
Her adviser helped her consider the potential implications for tax, Age Pension entitlements and aged care fees, helping her determine which investments to sell and which to retain.
Strategies to Improve Cash Flow
As your adviser we can:
- Develop strategies that generate regular and reliable income to help cover daily care fees and other living expenses.
- Design strategies that take your family situation and estate planning needs into account.
Choose the Right Investments
Harold and his adviser worked through the numbers to determine whether selling the family home to pay the RAD was the appropriate option for his circumstances.
The adviser also provided recommendations on how to invest the remaining sale proceeds and restructure Harold’s other investments.
This helped Harold improve his cash flow while considering how to protect the value of his estate for his beneficiaries.
Estate Planning
As your adviser we can:
- Highlight the implications of investment decisions on your estate plan to help avoid unintended consequences.
- Discuss the importance of an Enduring Power of Attorney and guardianship arrangements.
Protecting the Estate
Marg and Art were planning to sell their mother’s house to help pay for her entry into aged care.
Fortunately, their adviser recommended that they review their mother’s Will before making any decisions.
They discovered that their mother had left the house to Marg and the balance of the estate to Art.
Their mother had Alzheimer’s disease and was no longer able to change her Will. The adviser worked with Marg and Art to develop another solution for paying the aged care fees without compromising the intentions of the Will.
Need Help With Residential Aged Care?
Choosing a residential aged care service and understanding how to fund the costs can be complicated. Financial decisions around RADs, DAPs, investments, cash flow, Age Pension entitlements and estate planning can all interact with one another.
If you or a family member is considering residential aged care, professional advice can help you understand the financial options available.
Our financial advisers, Jane Purnell and Mark Holzworth, can assist with retirement planning and financial advice tailored to your circumstances. Our Aged Care Specialist, Alana Sharp, can help you understand and navigate your aged care options.
Contact Holzworth Partners to discuss how our team can support you through retirement and the decisions that may arise along the way.
The information provided in this document is general in nature only and does not constitute personal financial advice. It has been prepared without taking into account your personal objectives, financial situation or needs.
Before acting on any information provided, you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important to seek appropriate legal, tax and other professional advice.