When my grandmother went into aged care she didn’t sell her home. This gave her a great deal of comfort, knowing she didn’t have to sell the house she’d built with her husband and where they had raised their children – a home she had lived in for 60 years. She liked the idea of being able to go back to that house on weekends if she was able to. My family still own the house, though my grandmother passed away 10 years ago, and it has been important to us to hold on to that.
While the rules were different back then, I know that retaining the family home when you go into aged care is still important to so many people. It can help you retain a sense of independence at a time when you might feel like you’re losing your freedom. In most residential aged care homes there are set wake-up times, bed times and meals. Keeping your house can feel like the last vestige of control, and this can help with your emotional transition into care.
While it will depend on your individual circumstances, there are many alternative funding options if you want to try and retain your home. Most people aren’t aware that keeping their house may continue to be favourable from a government and tax perspective for some years, though it might change down the track. Some people may be able to put cash, if they have it, towards the future cost of their aged care. They can then drip-feed funds from that lump sum towards their aged care, instead of using their home for the bond, for example.
How much you need to pay for aged care depends on a range of factors, including the fees that you have to pay. There are generally four different fees attached to aged care and you may need to understand each of them to determine if you need to sell your family home to pay for them. It all comes back to ensuring there is comfort around the affordability of aged care. Some people want to be able to afford the Italian movie channel and a glass of Shiraz with dinner when they’re in aged care, others don’t mind. These decisions all impact how much aged care will cost you.
Another factor to consider when deciding whether or not to sell your home is the pension. Whether you lose your pension or not may depend on whether you pay a bond (or now commonly known as a RAD) for your aged care facility. For example, if you have a home worth $1 million dollars and you sell it and put the money in the bank, you will probably lose your pension. But if you use that money to pay the RAD to enter Residential Aged Care, you may actually find that the pension you receive increases. The fees around aged care are incredibly complicated, and how you pay them can impact a range of factors like whether you need to sell your home or how much pension you receive. It’s not a one size fits all situation, you need to find the solution that best suits you.
Another thing to consider when deciding whether to sell your family home is how long you may need to be in aged care. Sadly, the average stay in aged care is not long – it’s around 12 to 18 months. So it may not be worth rushing to the real estate agent to try to and you’re your home. It’s important to understand how long you may need care for – obviously this is a difficult thing for anyone to have to consider, but there are professionals like doctors who can help you here.
The positive side is that you do have options. You may not necessarily need to pay a large sum up front to fund your aged care. The best thing to do is to speak to someone who understands how the system works and then determine the best option for you both financially and emotionally.
Martin Sherwood is an Executive Advisor at Viridian Advisory
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