Aged care and the family home

Deciding what to do with the family home can create additional complexity to the already stressful time of moving into aged care.

There are different rules when it comes to assessing the former home for aged care and social security purposes, which makes it even more important to make a well-informed decision.

The following are 3 misconceptions our specialist advisers most commonly work though with families who are deciding what to do with the former family home when a loved one moves into aged care.

Misconception 1: My only option is sell the home to afford the room price

One of the most common misconceptions is that the home must be sold to pay for residential care.

When entering permanent residential aged care, a resident has 28 days to decide how they would like to fund the accommodation costs and while some may choose to sell the home, there is no requirement to do so.

As every family’s situation is different, an important first step is helping families understand their options and how that interacts with the Centrelink/DVA and aged care rules. It is critical that consideration is given to the resident’s whole financial situation, their estate planning goals, the current state of the property and any future maintenance and management needs.

 

Misconception 2: Selling my former home will mean I lose the age pension

Another common misconception is that selling the family home will remove Centrelink/DVA pension entitlements. This is not necessarily true – any potential impact will be based on how the sale proceeds are utilised.

If proceeds are used to make accommodation payments as a Refundable Accommodation Deposit (RAD) then those funds will continue to be excluded from the means testing for Centrelink/DVA purposes.

 

Misconception 3: We can’t afford that room as it is more than the value of the home

Many families incorrectly believe that they need to have assets equivalent to the residential care room price for the room to be affordable.

They are relieved to hear that there are several ways in which they can structure their accommodation payments and ensure they can afford their preferred facility which they may previously disregarded due to the costs.

For instance, a resident who is required to make an accommodation payment can do so with a lump sum Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP) or a combination of the two.  Further flexibility is allowed, as they can also elect to pay a part RAD and have the remaining DAP deducted from it which helps to reduce any day-to-day cashflow concerns.

Understand your options

Our specialist advisers put families in control of the choices they need to make. They are here to answer any questions you or anyone you know may have about the financial aspects of moving to aged care.

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