Australia’s ageing population is increasingly looking to retirement and aged care accommodation options. However many individuals who need to make this important change do not know about some of the hidden costs and potential financial problems associated with such a big move. There is a real need for people in this group to consider the need for appropriately structured legal and financial affairs.
It is our belief there have been that many people across Australia who have made mistakes. These may have unfortunately cost them thousands of dollars. This figure could easily run into the millions across the country given the large numbers of people in this category. Unfortunately many did not fully understand the complex documents and the costs associated with entry into retirement, nursing and aged care facilities. This is an extremely complex area and by not seeking specialist advice people are can be seriously damaging their financial affairs and causing undue stress. This can later extend to what is left for your beneficiaries when you die.
People are using Google and the internet as their first option for advice. However, specialised guidance regarding retirement and aged care accommodation options, the fine print implications of associated costs and appropriate asset structures for those individuals considering this move, are certainly not adequately addressed on the internet. People may even fall into the trap of using information sourced on the internet that is not even written by an Australian or in the Australian context. You don’t want to be using information that is intended for say the US or British people, because very likely might be wrong in the Australian context.
The large number of retirement accommodation options can pose a mine field for people entering this later phase of their lives. Properly structuring the ownership of assets could save retirees thousands of dollars. The problem is they are bombarded with an enormous amount of information and the vast majority find this overwhelming. This is normal.
This situation is further compounded in the case of accidents that force elderly people into specialised accommodation much sooner than expected. Relatives often don’t have the time or expertise to fully explore the financial implications of the various accommodation alternatives and hence choose the easiest and quickest option. It is critical that the various options and their implications are assessed before accidents happen, thereby ensuring the best path taken which accommodates the needs and financial circumstances of the people concerned.
In most cases residents are required to pay bonds to stay in aged care accommodation. During the past 10 years these fees have increased substantially. In 2000 bonds averaged between $200,000 and $500,000. Today these range between $300,000 and up to $1 million for the same aged care accommodation.
Depending on the accommodation choice, proper asset plans can play a major role in determining whether people can keep their full pension or other government benefits. A poorly constructed plan, or indeed no plan, could cost an individual’s full entitlements in addition to considerably more cash. A red flag indicator that asset planning is urgently needed is when an Aged Care Assessment Team (ACAT) is required.
An example of this situation is a elderly woman who was faced with the daunting task of arranging the finances for herself and her husband after his Alzheimer’s disease required him to be placed in specialised residential care. Her husband’s condition had deteriorated quite rapidly and everything was left to her to organise, not only accommodation but all financial matters. She had no idea what she was doing and signed up to the first option that was presented to her instead of seeking advice and exploring all options. It is often the case that the partner who has the most intricate knowledge of their financial affairs is the first to need to move and may have lost the capacity to tell the other about their financial situation.
The woman’s haste in making her decisions ended up costing her thousands of dollars. She found the implications of the numerous choices were not fully explained to her and she had to work them out as best she could. She indicated that given her time over again she would have taken more time and used a qualified solicitor to sort through the complexity of her situation.
Four important recommendations before deciding on retirement accommodation include:
- Seek specialised legal and financial advice prior to making any decision and signing any documents.
- Ensure estate planning is in order. Is there a Will and has a Power of Attorney or Enduring Guardian been appointed?
- Be prepared for unexpected changes in circumstances.
- Discuss with elderly family members their different options while they are still cognizant of their surroundings.
* The information on this page does not constitute legal advice and should not be relied upon in lieu of seeking professional advice on the specifics of your individual circumstances.
