Moving into aged care is one of life’s major milestones. It’s a moment when we tend to have more time on our hands, which can be a double-edged sword. Hours of anxiety can set in as we try to weigh up what’s going to be best for the future.
The home we own, often our most precious asset, typically takes centre stage. There’s added pressure because we know we’ve only one “go” at getting right what we decide to do with it.
Help is at hand in the form of aged care financial planning. Read on to discover how an aged care financial planner can smooth the way for a long and healthy financial future.
Why You Should Enlist the Help of a Financial Advisor
There are likely to be plenty of emotions flying around if you think you may need to sell your home to pay for aged care. It’s perhaps not the ideal time to be making such a life-changing decision. It pays to have a financial advisor by your side who can offer you impartial, objective advice.
There will always be lots of options. Your aged care financial planner will have seen countless scenarios similar to yours many times before. They’ll understand the range of choices available for the best and most appropriate outcome for your situation.
To Sell or Not To Sell Your Home
Once you sell your home, you will no longer fall into the category of homeowner. That means what you pay your service provider as a Refundable Accommodation Deposit (RAD) won’t get treated as an asset when calculating your age pension. This figure still applies when working out the fee for your means-tested daily care.
If you hang on to your former home, you can continue as a classified homeowner for up to two years. In this instance, your home will still be exempt from your asset test. When the two-year period ends, there’ll be a current market value assessment of your former home under the non-homeowner asset limits.
After you’ve moved into care, you’ll have 28 days to inform your provider whether you intend to pay the total price as a lump sum/refundable accommodation deposit (RAD), daily accommodation payment (DAP) or a mixture of both.
What Aged Care Financial Planning Can Do
Your aged care financial planner will have all the up-to-date information at their fingertips. They can help you negotiate a fee plan with your preferred facility through a payment structure that best suits you.
They can advise you on the most favourable strategy for your family home. The plan will optimise your age pension entitlements and accommodation costs. They will work out the accommodation payment or contribution payable and how best to structure your personal wealth to fund this.
They can also calculate the best ways to minimise your ongoing accommodation fees. This may involve effectively structuring investment products and implementing a tailored aged-care financial strategy.
Your Estate Planning
Part of aged care financial planning is reviewing your estate strategy at regular intervals, especially if your circumstances change and you move into residential aged care. For example, you need clarity on whether your will reflects your wishes.
Should you develop dementia, you may need to pass on decisions about your financial and medical treatments to someone else. Having an Enduring Power of Attorney (and Guardianship) in place will make this much more straightforward.
Bear in mind that if you or a loved one loses their mental capacity, it will be too late to set up these kinds of arrangements.
Your aged care financial planner can help with advice on how an accommodation placement could impact current estate planning strategies. They will work with your estate planning solicitor to:
- Complete essential documents
- Help make decisions about your assets
- Guide your family through the estate planning process
They can also help dissolve your investment portfolio should you die. They’ll distribute your finances and any insurance benefits as per your instructions. This can be incredibly useful for families at such a difficult time.
Taking Care of Social Security Records and Entitlements
Your details and records with Centrelink or the Department of Veterans Affairs (DVA) need to be updated within 14 days should there be a change in your circumstances. That includes any move you may make into aged care. Your payments may alter depending on potential changes to your income and assets.
There are important implications if you are part of a couple. Although you will still get assessed for combined income and assets, you will both begin to receive the higher single rate of pension.
You should seek advice from your aged care financial planner to maximise your entitlements. They can offer Social Security support by assessing any effect on Centrelink entitlements and income.
They can play a valuable part in aged care financial planning by working out choices for paying any refundable accommodation deposit or daily accommodation fees. This will ensure there’s no negative impact on any Centrelink benefits. They can also help maximise access to extra benefits like the Commonwealth Seniors Health Card.
Exemptions and Offsetable Tax
There could be Centrelink exemptions and effective ways to offset taxes that your aged care financial planner can help you with. For instance, imagine you moved into an aged care facility and made a lump sum accommodation payment. This would be an exempt asset for DVA and Centrelink purposes. This could entitle you to a better rate of Age Pension or other types of benefits.
The Projection of Future Asset Values
When you reach old age and require additional support, there are likely to be many dependencies. These will impact your plan, so you will likely need to make adjustments from time to time.
Planning for aged care should involve consideration of the following:
- The consequences of a partner remaining in your home while you’re in care
- The implications of renting out the family home while you live in care
These essential points could affect the value of any assets you intend to pass on to your beneficiaries.
Planning For Aged Care with PAC Financial
Working with our aged care financial planning team is one of the best investments you can make. Book a free consultation with a PAC aged care financial planner today!
