There’s no getting around it. Moving into aged care can be a costly business and, once you put that payment down, you can feel like the inheritance you planned to leave for your family is shrinking before your eyes. But if you get informed and put a few practical strategies in place, you can make life easier and have peace of mind that your estate is going into the hands of the ones you love.
Get specialist financial advice
Navigating the financial rules and regulations around transitioning into aged care can be mind-boggling. These are concepts and structures most of us haven’t had to interact with at any other point in our lives, so engaging a specialist aged care financial planner is vital here. They can set up your new financial life to maximise benefits.
This kind of help goes absolutely hand-in-hand with estate planning. An expert planner will ensure your will is thorough, up to scratch and leaves no room for misinterpretation. Lock it down tight to refute any potential challenges to your estate, for example if you have estranged family members or a former spouse. Your financial planner will help you with this.
Make a will…
Make a will. Or update your will if it’s been a while. Make it detailed and clear. Work with a specialised professional to make sure everything is addressed (yes, even your singing fish plaque and collection of souvenir teaspoons) and distributed according to your wishes. There are many things that can be included in a will that you might not think of, or there may be assets that come into your possession while you’re in aged care, so your specialist will help you to keep your will as current as possible.
If you die without a will, or a valid one (ie, ‘intestate’), then your state government will distribute your assets. Generally, this means they will be divided equally between your children (if you have children and your spouse is deceased). Create a will that is watertight and cannot be contested by anyone randomly claiming to be a long-lost relative. If you or your loved one is not capable of making a will due to ill health, it’s possible to get a court-approved statutory will.
…and make it RAD!
If one of your kids (or a close friend) has stumped up the cash (in part or in full) to pay your RAD (Refundable Accommodation Deposit) to help you move into aged care, update your will and make sure it stipulates the repayment of this loan out of your estate. Arrange a written agreement for this as it’s as important for your estate planning as it is for your child’s.
Another option, if you are retaining the family home, is for the child to lend you the money via a written loan agreement and get a registered mortgage over the title to the family home or some other asset as security. This way, they have the assurance that they will be repaid before everything else gets divided up.
Just remember that retaining the family home can be means-tested and will count as an asset, which will make your aged care costs rise and your pension fall. Once again, sit down with your specialist financial planner to make sure everything is humming along to your best advantage.