How to Avoid Selling Your Home to Pay for Care

How to Avoid Selling Your Home to Pay for Care

  • Prakash Bartaula
  • 7 July, 2024
8 Min Read

Seek guidance from an aged care financial advisor, utilize payment options like Daily Accommodation Payment (DAP) or a mix with Refundable Accommodation Deposit (RAD), and consider liquidating other assets first. Leverage home equity through methods such as reverse mortgages or the Home Equity Access Scheme, and access government support. Prefer home care services to mitigate expenses and ensure your financial and legal plans are updated for effective aged care management.

How to Avoid Selling Your Home to Pay for Care in Australia

How to Avoid Selling Your Home to Pay for Care is a crucial topic for many aging Australians and their families. As the cost of aged care services continues to rise, many seniors face the daunting prospect of having to sell their family home to cover these expenses. This situation can be emotionally distressing and financially challenging, potentially uprooting individuals from their long-time residences and impacting inheritance plans. 

Avoid Selling Your Home to Pay for Care

Fortunately, there are several strategies and options available that can help seniors avoid or delay selling their homes while still accessing the care they need. By understanding these alternatives, older Australians can make informed decisions about their future care without necessarily sacrificing their most valuable asset.

 

Seek Professional Financial Advice

Highlight: Consulting an aged care financial advisor is crucial.

Before making any decisions, it’s essential to seek expert financial advice. An aged care financial advisor can:

  • Assess your current financial situation
  • Explain the complex aged care fee structure
  • Identify potential government benefits
  • Develop a personalised strategy to fund your care

Investing in professional advice can save you money in the long run and help you make informed decisions about your aged care options.

Explore Alternative Payment Options

Daily Accommodation Payment (DAP)

Highlight: Consider paying a DAP instead of a lump sum RAD.

Instead of paying a large Refundable Accommodation Deposit (RAD), you can opt for a Daily Accommodation Payment (DAP). This option allows you to:

  • Make smaller, ongoing payments
  • Retain more of your assets, including your home
  • Have more flexibility in your financial arrangements

Combination of RAD and DAP

Keyword: Flexible payment options

You can also choose a combination of RAD and DAP payments. This approach allows you to:

  • Pay a smaller lump sum upfront
  • Cover the remaining amount through daily payments
  • Balance your need for cash flow with asset retention

Prioritise Other Assets

Highlight: Consider selling other assets before your home.

Before considering selling your home, look at other assets you may be able to liquidate:

  • Shares or investments
  • Holiday properties
  • Valuable collectibles or artwork
  • Vehicles

By selling these assets first, you may be able to generate enough funds to cover your aged care costs without touching your primary residence.

Reduce Your Refundable Accommodation Deposit (RAD)

Keyword: Negotiating aged care fees

If you decide to pay a RAD, consider ways to reduce the amount:

  • Negotiate with the aged care facility
  • Look for facilities with lower RAD requirements
  • Consider shared room options, which often have lower fees

Remember, the RAD is refundable when you leave the facility, so reducing this amount can help preserve more of your estate for your beneficiaries.

Family Financial Support

Highlight: Carefully consider family loans or contributions.

Some families choose to pool resources to help pay for aged care without selling the family home. This could involve:

  • Adult children contributing to care costs
  • Family members providing loans
  • Setting up a formal family agreement

While this can be a helpful solution, it’s crucial to seek legal advice and document any arrangements to avoid future disputes.

family support

Utilise Your Home Equity

Reverse Mortgage

Keyword: Home equity release

A reverse mortgage allows you to borrow money against the equity in your home. This option can:

  • Provide funds for aged care without selling your home
  • Allow you to stay in your home if you’re receiving home care
  • Offer flexibility in repayment terms

However, reverse mortgages can be complex and may impact your estate, so it’s essential to understand all the implications before proceeding.

Home Equity Access Scheme

Highlight: Government-supported equity release option

The Australian Government offers the Home Equity Access Scheme (formerly known as the Pension Loans Scheme). This scheme allows eligible homeowners to:

  • Borrow against the equity in their home
  • Receive regular payments to supplement their income
  • Use the funds for various purposes, including aged care

This option can be particularly useful for those who want to receive care at home or need extra funds to cover aged care costs.

Consider Alternative Aged Care Facilities

Keyword: Comparing aged care options

Not all aged care facilities have the same fee structure. You may be able to find a suitable facility with lower costs by:

  • Researching different facilities in your area
  • Considering facilities in less expensive regions
  • Looking at not-for-profit or government-run facilities

While location and quality of care are important, finding a more affordable option could help you avoid selling your home.

Understand Government Assistance

Highlight: Stay informed about entitlements and subsidies.

The Australian Government offers various forms of assistance for aged care. It’s crucial to understand and access all the support you’re entitled to:

  • Age Pension
  • Commonwealth Home Support Programme
  • Home Care Packages
  • Residential Aged Care subsidies

By maximising your government entitlements, you may be able to reduce your out-of-pocket expenses and preserve your assets, including your home.

Reduce Your Assessable Assets

Keyword: Asset reduction strategies

There are legal ways to reduce your assessable assets, which can lower your aged care fees and potentially help you avoid selling your home:

Purchase a Funeral Bond

  • Pre-pay for funeral expenses
  • Funeral bonds up to a certain value are exempt from the assets test

Value Home Contents Conservatively

  • Use the ‘fire sale’ value for household items
  • This can lower your overall asset value

Gift Assets Within Limits

  • You can gift assets up to $10,000 per financial year, up to a maximum of $30,000 over five years
  • Be aware of Centrelink’s gifting rules to avoid penalties

Explore Home Care Services

Highlight: Consider alternatives to residential aged care.

If your care needs allow, staying in your own home with support services can be a viable alternative to residential aged care:

  • Home Care Packages can provide various levels of support
  • You can receive care while retaining your home
  • This option often has lower costs than residential care

Understand Special Concessions for the Family Home

Keyword: Aged care home exemptions

There are special rules and exemptions regarding the family home in aged care assessments:

  • The home is exempt from the assets test for two years after moving into aged care
  • This exemption can be extended if a spouse or dependent family member continues to live in the home
  • Renting out the home can provide income to cover care costs while potentially preserving the asset

Understanding these concessions can help you make informed decisions about your home and aged care arrangements.

Plan Ahead

Highlight: Early planning is key to avoiding financial stress.

The earlier you start planning for potential aged care needs, the more options you’ll have:

  • Discuss care preferences with family members
  • Review and update your will and power of attorney
  • Consider long-term care insurance options
  • Start building a dedicated aged care fund

By planning ahead, you can potentially avoid the need to make rushed decisions about your home and finances when care is needed urgently.

Regularly Review Your Situation

Keyword: Ongoing financial assessment

Your financial situation and care needs may change over time. It’s important to:

  • Regularly review your aged care strategy
  • Reassess your options as circumstances change
  • Stay informed about changes to aged care policies and fees

By staying proactive and informed, you can adapt your approach to ensure you’re making the best decisions for your care and your assets, including your home.

Seek Legal Advice

Highlight: Legal considerations in aged care planning

legal help

In addition to financial advice, it’s often beneficial to seek legal counsel:

  • Ensure your will is up to date
  • Set up or review enduring power of attorney
  • Understand the legal implications of any financial arrangements

Legal advice can help protect your interests and ensure your wishes are carried out regarding your home and other assets.

By exploring these strategies and options, many Australians can find ways to fund their aged care without selling their family home. Remember, every situation is unique, and what works for one person may not be the best solution for another. The key is to start planning early, stay informed, and seek professional advice to make the best decisions for your individual circumstances.

 

Prakash Bartaula

Joined : 5 April, 2024

I’m deeply passionate about the National Disability Insurance Scheme (NDIS) and dedicated to exploring its intricacies. Through research, communication, and writing, I aim to shed light on NDIS provisions and empower individuals with disabilities. Join me as we navigate the transformative potential of the NDIS together.

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