What is Age Care
There are two stages to retirement planning. Both stages need to be considered by everyone, especially potential retirees or those that have aging parents or relatives.
The two stages in retirement planning are as follows:
Initial retirement, and the planning involved to ensure that you have sufficient income through super, non super assets and/or CentreLink Age pension to meet your long term retirement needs.
When a retired individual, or couple, can no longer look after themselves in their own home i.e. they may not be able to cook, wash, dress themselves or, they may be able to do these things, but have been diagnosed with Dementia or Alzheimer’s and know that their condition will slowly deteriorate, where they will not be able to accomplish such activities and will require specialised care.
The stage 2 part of retirement sometimes has been commonly referred to as “gods waiting room”. Therefore, it is an area that no one really wants to talk about.
However, the simple fact is that, it is an area that needs to be planned for in the best possible way.
Due to our ageing population, Age Care is a growing industry that will consume all of us at one time or another.
If you are retired or retiring shortly, it is important for you to start thinking about this now for yourselves, or even for your loved ones (aging parents), so that when a decision has to be made, which at that stage can be a very emotional one, that the decision made is correct, and it does not disadvantage the individual/s going into Age Care i.e. such as the Means Testing requirements of an Age Care facility provider and/or CentreLink for the Age Pension, or your loved ones, from an Estate Planning point of view.
Why do I need This?
You need this simply because it’s an inevitable fact of life that you will need to participate in or you may have parents or relatives that need age care assistance because they cannot look after themselves.
To further compound this, recent Government legalisation has changed the funding rule options when entering an Age Care facility.
In order to save on costs you need sound advice regarding the many options available.
FOFM understands the complexity of age care along with the emotional impact that it has on everyone involved in this process.
There are different strategies that can be implemented to fund the costing of Age Care, which is not cheap, and it must be done in the most appropriate manner in order for the Age Care recipient to be disadvantaged by the relevant Income and Asset testing rules with both the Age Care facility provider and CentreLink.
What happens if I don’t have it?
If you don’t plan, or consider Age Care (for yourself or your loved ones)at least 5 years before having to enter Age Care, you may not have enough time, or the mental capacity, to make appropriate decisions on this. One of the major reasons is that the individual who has to enter age care may be legally incapable of making such decisions and may not have appropriate Powers of Attorney for a member of the family to act on their behalf.
This could mean that family members, who will eventually have to make decisions, would have some pre documented clarity, as to what the loved one wants before moving into that phase of their life, and therefore, it is much better, for all concerned, that the age care requirements are documented well and truly beforehand.
Furthermore, there is a need to ensure that the aged care recipients’ Estate Plan has taken this into account, and also to ascertain whether there is a need for a Testamentary Trust provision in the Will, similarly ensure that Powers of Attorney have been put in place to ensure the age care recipient wishes are carried out whilst they are alive.
This then brings into play the assessment of the individuals assets, whether, and how, they can afford to move into Age Care and under what circumstances. i.e. do they sell the family home? What happens if they don’t? Are there any advantages or disadvantages either way? What are the effects of such a sale on the CentreLink Age Pension or the Age Care facility means testing? What are the maximum costs of an Age Care facility? How can that cost be funded? Does it have to be a lump sum or can it be funded over a period of time like a loan repayment? Can you have a combination of both?
These are issues that need to be addressed and if you do not have a strategy in place, it will be forced upon you at the last minute, and then you may not make an appropriate decision for yourself, or your loved ones, as it would be very emotional and potentially an irrational decision may be made due to the timing of that decision.
What will the cost be to me?
The question you need to ask yourself is “what would be the cost be if you don’t seek professional advice now and plan for it? The cost of this advice may save you a lot of money in the future.
The cost of Age Care needs to be taken into account and to assess how it can be appropriately funded. Once again this cost, if not planned properly, could be a lot more costly to the individual entering Age Care and also, from an Estate Planning point of view, the individual/s going into Age Care may want to ensure that there is an appropriate inheritance left for their children.
At FOFM our initial consultation is free and then any future advice is charged at an hourly rate.
Please call our office if you wish to discuss (03) 9646 7588