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The 5 BIGGEST aged care mistakes to avoid at all costs!

We hear this a lot. It’s probably the most common refrain from people experiencing the aged care process for the first time. And it’s certainly the main reason people approach us for help. Yes it is complex, but mistakes and oversights by the resident & their family can make it much, much worse.

We’ve been providing aged care financial planning advice to Sydney for years now. So we’ve seen the serious problems people sometimes cause themselves. From our experience, here are the top 5 aged care mistakes to avoid at all costs!  

1. Sell the family home without first checking for impact on aged pension.

Without doubt, this is unquestionably the most serious error that families make. Selling the family home to pay the accommodation bond is still the most common way people pay aged care costs (although there are often other options available), but it can play absolute havoc with aged pensions.

Essentially, any funds from the sale left over after paying the accommodation bond are deemed to be an assessable asset by Centrelink. If the resident going into care has significant cash in the bank after paying the bond, they could lose some or even ALL of the pension. And the worst thing? Such a mistake cannot be undone!

That’s why it’s CRUCIAL for families to check first before selling the family home.

Solution: You can call the Centrelink Financial Information Service (FIS), however they provide information only, & cannot advise you on strategies to avoid or reduce impacts on age pension. Feel free to call Sydney Aged Care Financial Advisers to check if selling the home to pay a bond will affect your pension.

2. No Power of Attorney.

A power of attorney (POA) is such a simple thing to organise (any solicitor can do it for a small fee), and yet so many families leave this until it’s too late. It’s important to register an enduring power of attorney for mum/dad/relative before they go into care, because if they lose mental capacity through dementia, stroke or Alzheimer’s & no power of attorney is already in place, then a POA cannot be issued & the family may lose the ability to manage their financial affairs.

Put simply, the Guardianship Tribunal will take over. Although a family may be appointed a guardian, there are many more hoops to jump & managing finances & assets becomes much more complicated.

Solution: If you have parents or family who are getting older, showing some early signs of memory loss, get a power of attorney in place immediately. It will save you a lot of stress & hassle if things take a turn for the worse.

3. No Will or estate planning.

Ideally by the time someone is ready for admission into residential care, a Will should be in place. But you may be surprised by how often there is no Will, or the will that is available is old and outdated. Failure to leave a valid will can be the cause major emotional distress for children and family.

Solution:  If you have a family member approaching entry into a nursing home, check the status of their Will. Moving into aged care is a major ‘life event’ that may be the last opportunity for estate planning.  Feel free to talk to us about your estate planning concerns.

4. No financial advice.

Our clients are often very surprised by what’s possible with financial advice for aged care. Although people with little or no assets don’t usually need it, if you or your family member have TWO or more of the following then we strongly recommend your seek advice:

– a family home
– pension income
– superannuation income
– shares & investments
– trusts
– significant cash holdings
– annuities
– secondary properties

Moving into nursing homes can affect pensions, tax, & care fees. Failure to get advice can be extremely costly.

Solution: Even if you think you don’t need assistance, a quick phone call to an advisor can give you peace of mind & save a lot of heartache.

5. Failure to negotiate

These days it’s very common for Sydney care facilities to charge $500,000 or more for an accommodation bond. Although the bond is refunded within 14 days of death, less the retention amount , that’s still a lot money! And where large sums are involved, residential aged care facilities are more open to negotiation on some fees & charges, yet many families don’t know this & miss an opportunity to save lots of money.

Solution: It’s often possible for a financial planner to structure the payment of costs so that some fees may be negotiated down or away entirely. So any fee you pay to the advisor, you could more than make up for in fees waived or reduced by the nursing home or hostel.

I hope you found this list useful. If you’re part of the aged care industry & would like to add to the list of the 5 BIGGEST aged care mistakes to avoid at all costs, please leave a comment with your suggestion.

Thanks, Phil

Financial Advisor Aged CareAged Care Financial Planning


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