Financial consultant, Wealth Connexions, has compiled all the necessary aged care advice that you need to know before you settle and purchase.
The process of finding the perfect aged care can be a confusing and sometimes time-consuming task. The number of providers and payment options continue to grow at an exponential rate, making the process all that more difficult. Obtaining financial advice when searching for the right aged care is a simple way to ease the process and ensure you are receiving the best possible outcomes for you and your loved ones.
Assess What Aged Care Assistance You Need and Are Eligible For
If you need help assessing what aged care services you need and are eligible for, the Australian Government can help you with the following steps:
- Have an ACAT assessment
- Complete the Means Test assessment form
- Request a nominee
- What you need to pay
- Extra help
Additionally, Wealth Connexions’ accredited team for Aged Care Advice, can aid with any of these steps and processes if needed.
Common Mistakes in Aged Care Funding
By having a financial advisor like Wealth Connexions, you can ensure that you are well educated in the process of aged care. This will allow you to avoid the common mistakes that other Australians make, which could leave you in financial strife.
The Six Major Mistakes People Make When Funding Aged Care Are:
1. Rushing into funding arrangements for aged care accommodation
It is understandable why so many Australians’ rush into acquiring funding arrangements for aged care. In Australia, a new aged care resident has 28 days to choose whether they are going to move forward with paying a lump sum, such as a daily accommodation payment (DAP), a refundable accommodation deposit (RAD), or a combination of the two. It is important to note that there is no one size fits all in this selection, it is important to seek in-depth research and advice for the option that will best suit you or your loved one.
2. Selling the family home without proper consideration and thought
This is, without question, a highly serious mistake families make. Many people are not aware that selling their family home has a direct impact on their aged pension. However, this is still one of the most common ways families pay for aged care accommodation.
Additionally, after the accommodation bond is paid, the leftover funds from the house settlement are deemed an assessable asset by Centrelink. This means that if the resident going into aged care has significant funds in the bank, they could lose some or all of their pension.
Families must be aware of all of the feasible options available to them, regarding the acquisition of funds for the accommodation bond. Wealth Connexions have accredited aged care specialists that offer personalised and comprehensive aged care financial advice in Brisbane.
3. Being unprepared to fund ongoing aged care costs
While the accommodation bond secures a place in the aged care facility, there are additional ongoing costs, like carer fees which need to be considered. The current maximum Basic Daily Fee residents pay is $51.21 ($18,691.65 per annum). However, some residents will also be required to pay a means-tested care fee of up to $27,532.59 p.a., though this amount depends on the resident’s income and assets. At Wealth Connexions, we work with our clients to find the best possible payment options, such as cash reserves, selling down investments, or pension payments.
4. Providing support for parents, without an understanding of the effect on aged care cost calculations
It is understandable for families of aged care residents to want to provide financial support, however, this support can do more harm than good. The problem this creates is that residents will then have additional funds or assets, which directly impact their eligibility for the means-tested care fee calculation, resulting in increased ongoing aged care costs. An alternative to this, would be for families to pay the resident’s ongoing costs directly, as this does not impact the means-tested care fee.
5. No power of attorney
Electing a power of attorney is a simple task that is surprisingly often overlooked. Electing a power of attorney before a family member goes into care is crucial. If this is not carried out and the family member loses mental capacity, then a POA cannot be issued, leaving the family ineligible to manage their finances.
Instead of a family member managing their own finances, it will fall into the hands of the Guardianship Tribunal. A family member can be appointed as a guardian but there is a significant number of hurdles, that they must go through to manage their family members’ finances and assets once they become an aged care resident.
6. No will or estate planning
If you have a family member who is getting closer to the entry of a nursing home, it is important to check the status of their Will. The transition into aged care is not only a major life event, but possibly the last opportunity for estate planning. Some issues that may arise from an invalid Will can include: an increase in costs of estate administration and a loss of control over the distribution of the estate and assets.
Plan Your Aged Care Finances with Accurate Knowledge
To avoid these common mistakes and to find what is best for you and your loved ones, speak to our accredited Aged Care Financial Advice specialists today. Aged care financial advice could be one of the best investments you make in your life. If you are still unsure on whether aged care financial advice is right for you, refer to our list below. If you or your family have any of the following, we strongly recommend seeking financial advice from our Brisbane-based team.
- A family home
- Trusts
- Substantial cash holdings
- Annuities
- Secondary/investment properties
- Shares and investments
- Superannuation income
- Pension income
