The family home – 3 most common misconceptions

Moving into aged care can be an emotional and difficult decision, and knowing what to do with the former family home can create additional complexity.

There are differing 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.

In the upcoming webinar we look at 3 misconceptions our specialist advisers most commonly work though with clients 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 former to afford the room price

One of the most common misconceptions is the former 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 clients 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 need.

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

A 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 RAD then those funds will continue to be excluded from the means testing for the Centrelink/DVA purposes.

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

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

Many families 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.