Moving into residential aged care is stressful and can be compounded by anxiety around selling the family home. Some people find it hard to part with their home or may not be ready to sell. This can raise concerns about how to afford the fees.
Knowing that you have choices, and accessing advice to understand these choices may help to reduce stress and create a better outcome.
Do you have to sell?
When faced with paying several hundred thousand dollars for a room in aged care, panic can set in. However, selling your former home is not your only option. You may choose to sell, or you may opt to retain the home.
Moving into residential care is effectively shifting into a new home. Each time you move, you can choose to buy or rent. Renting allows you to live in a home you can’t afford to buy, or don’t wish to buy.
With residential care you have the same options. Your room price is usually quoted as a lump sum which can be converted into a daily fee using a specified rate of interest. Paying this daily fee (or “renting” the room) may allow you to keep your former home if that is your preference.
Catherine agrees to pay $600,000 for her room in residential care. At the current interest rate of 4.04% per annum, this converts to $66.41 per day (plus other ongoing fees). This gives Catherine the choice to “buy” the right to live in the room for $600,000 or “rent” the room for $66.41 per day. She could also choose part buy and part rent.
When to make a choice?
The decision whether to sell or keep the former home has many personal aspects, but accessing advice can help to reduce some stress.
Once you have been offered a room, you will be asked to sign a Resident Agreement. This is a contract outlining your rights and responsibilities and the obligations of the care provider. It includes the fees you can be asked to pay.
This agreement should specify the room price and show what this converts to as a daily fee. But you don’t have to make a choice then. You have 28 days after moving into care to let the provider know whether you want to pay the full price as a lump sum (refundable accommodation deposit – RAD) or daily rent (daily accommodation payment – DAP) or a combination of the two.
The 28 days gives you time to seek good advice to make an informed choice.
As Accredited Aged Care ProfessionalsTM we have helped many clients to make this choice. We help to find a choice that is affordable, as well as works best for the family and protects the value of the estate.
Call us today on 03 5227 7777 to discuss how we can help make your aged care experience less stressful.
This document has been prepared for the general information of investors and does not take into account the investment objectives, financial situation and particular needs of any particular person.
While reasonable care has been exercised and the statements contained herein are based on information believed to be accurate and reliable, neither Synchron nor its directors, employees, agents or Authorised Representatives shall be liable (unless otherwise required by law) for any loss or damage suffered or caused to any person or corporation resulting from or contributed to by any error or omission from such statements including any loss or damage caused by any fault or negligence on the part of Synchron or otherwise”.
Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current at 1 July 2021.