House for sale aged care

To Sell or Not? Aged Care Fees & The Family Home

When it’s time to move into aged care facility, older Adelaide residents face a difficult decision—to sell or not to sell the family home.

Selling the family home has in the past been the obvious choice for many; the proceeds of the sale being used to pay for aged care entry fees. Although it remains a popular option for many Adelaide families, the new aged care reforms are changing the game. Suddenly, it’s not just about being able to pay the accommodation bond anymore.  Under the new set of reforms, you must pay the Refundable Accommodation Deposit (RAD) or Daily Accommodation Payment (DAP) upon entry to a residential aged care, plus the Basic Daily Fee and often the Means Tested Care Fee once you are receiving care.

To sell the family home and use the proceeds to pay the nursing home fees might still be the best choice. However, if your house  is valued a lot higher than the cost of the bond, it may be better to keep the home. The truth is there is no one rule of thumb to guide everyone in making the decision. Every one has different circumstances, source of income, assets, and value of home. Not to mention that different nursing homes charge different ‘RAD’ or ‘DAP’ entry fees. It is such a complex decision that financial advice from a specialist aged care financial planner local to Adelaide is usually a wise investment.

Aside from the accommodation bond (now called ‘RAD’ or ‘DAP’), you also need to consider funding for the Basic Daily Fee, which is valued at $46.50 as of July 2014. This pays for your basic daily living expenses. The Means Tested Care Fee is a further charge that is means tested against your assets and income. In addition to this, there may also be an Additional Service Fee, which nursing homes can charge for extra services and luxuries you choose while you are in an aged care facility.

As this article illustrates, the Means Tested Care Fee can actually work in your favour and give you good financial reasons for holding on to family home. The Means Tested Care Fee considers any upfront payment as an asset, while it only includes the first $154,179 of the value of your home.

If you decide to keep your home, you must also consider if it can be rented out easily or it needs extensive work or renovations. This is important because depending on the way your aged care costs have been negotiated, you might need to rely to rental income for the cash flow required to cover aged care fees. If you think the value of your home will increase significantly in the years to come, renting it out can be a more viable option for you than completely letting go of the house through sale.

Whether you decide to keep or sell the home, it’s also usually a good idea to consult your family members. Although it may make financial sense to sell, emotions can often come in to play and family may not be comfortable renting it out to strangers or disposing of the property in a sale. Sit down together and discuss your options. If your spouse or carer still stays at home the decision might be more complex still, so don’t be afraid to seek professional aged care advice to weigh all the options.An aged care financial adviser can often answer your questions and explain the implications of your decision. If you decide to keep the Adelaide home, your financial planner can help you make a plan and formulate strategies to fund your aged care fees.

It is often a highly emotional time whenever a family member is making a transition to a nursing home.  But with proper planning and preparation, you can have a stress-free journey to aged care. If you want a guide for your journey to aged care and avoid costly mistakes, call us today at 1 300 422 232. 

Regards, Carmela

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