Many of us don’t like to think about ourselves or loved ones getting older and more frail and as a result we quite often don’t plan for it.
What if you (or a loved one) start to quickly lose your health or mental capacity? Without a plan, you may find yourself rushing into decisions such as selling your home and moving into aged care. This may not be the best option and could end up costing you money.
An early discussion with a financial advisor to plan for growing older can end up saving time, money and heartache.
Deciding where to live
Moving into an aged care home is one of many options in these sorts of situations. It may be possible and more cost effective to have in home care and support. Or you may wish to live in a granny flat built on the property of a family member. They each have different costs and taxation implications.
For example, if you sell your home, the dollars count as an asset when you are means tested for aged care, whereas the family home could remain an exempt asset for a period of time, helping to reduce the cost of ongoing care fees.
You may also need to consider or change other investments or assets to support your new plans.
The rules around moving into aged care can be complex– in terms of eligibility and upfront and ongoing costs. Different aged care homes have different entry costs and ongoing fee structures, meaning it is a good idea to do some investigation before entering a home. But if you have left it too long and you or your loved one is forced to enter a facility, you may not have the benefit of being able to choose your preferred option.
There are good resources to help you understand the latest rules and processes on government websites such as My Aged Care. However, this information doesn’t cater for your unique situation. Even the way you complete Centrelink forms can have unintended and unnecessary cost implications.
Estate Planning
Another area that is important as we grow older is creating or updating an estate plan.
If you sell your home and move into aged care or another type of housing, you may need to update your Will. If you are like most people, chances are you may not have updated your Will in a while to account for changed family relationships such as the death of a loved one or children marrying or divorcing. You may have new preferences for where you want your assets to go.
There are other estate planning documents that you may need to consider. Powers of Attorney give someone the ability to make financial decisions on your behalf. An Enduring Guardian gives someone the ability to make medical and lifestyle decisions on your behalf and an Advance Care Directive or Living Will outlines your wishes regarding your healthcare and treatment if you become seriously ill or injured and unable to make decisions yourself.
You need to create or update these documents while you have the mental capacity to do so, otherwise you increase the risk of them being challenged or not followed.
Expert help with elder care planning
When thinking about planning for growing older it can be difficult to know where to start or it may seem too hard to understand the various rules and options. An unbiased professional such as a financial advisor can ask the right questions to help you decide what is right for you and explain the various cost and tax implications of those decisions.
Pitcher Partners’ experienced financial advisors can give you the right advice to help create a plan for growing older that suits your unique situation and caters for changing circumstances.
Have a question or need help with elder care?
We love questions. If you want to know more about Pitcher Partners Newcastle and Hunter’s private wealth management services please contact us.
Matt Kerr is a Partner and Private Client Advisor at Pitcher Partners Newcastle and Hunter. A man of many talents, Matt is a Chartered Accountant specialising in financial planning as well as a Specialist SMSF Adviser and a Certified Financial Planner. He loves listening to people’s stories and appreciates that everyone’s story is different. Matt enjoys allaying people’s financial concerns so they can enjoy living out their golden years.
