Before helping a client, family member or yourself to move into an aged care facility it is imperative to obtain the correct financial advice. I had an experience this week with a client that really shocked me and highlighted how important this is. My client Margaret, lives in the family home and has been on a disability pension for many years. Her father suffers from Alzheimer’s Dementia and has been in care since July this year, in a facility where Margaret had signed an agreement to pay a (RAD) Refundable Accommodation Deposit of $550,000. The Centrelink form submitted for her father showed assets of $90,000 (excluding the family home) which put him into the partially supported category.
Margaret and her brother, with advice from their solicitor and accountant, were going to sell the family home (valued at just over $1M) and use $550,000 from the proceeds to pay the RAD to the facility, and use rest of the proceeds to purchase a smaller home for Margaret to live in.
Margaret soon realised that the current facility was unable to meet her father’s care needs as he needed a dementia secure facility. She was referred to me by a carer to look for alternative and more suitable accommodation. When Margaret told me the plan to sell the family home the following Saturday I was completely shocked! Although I am not a financial planner I do understand the rules around aged care legislation. I referred Margaret immediately to an Aged Care Specialist Financial Planner and his first response was to take the property off the market as he understood the consequences for the father and Margaret would not be good if they followed their plan.
Firstly, the house is a ‘protected’ asset as Margaret has been living there for over five years on a Centrelink Pension. Margaret did not have the authority to purchase another property with funds from the sale of her father’s property while he is residing in aged care, even though she had Power of Attorney, as it would not be deemed as using his money for a purpose from which he will benefit, as the law decrees. Secondly, the assets from the property sale would be attributed to her father resulting in him losing most or all of his pension. As he was already deemed a partially supported resident he could not pay more for his accommodation. Thirdly, Margaret would have nowhere to live!
The story has a happy ending as I was able to find accommodation in a dementia wing of a lovely facility with her father as a partially supported resident and NOT paying a RAD. Margaret had been badly advised about paying the RAD as well, and she now knows she is entitled to live in the family home for the rest of her life. It was a close call.