• Significant increases in Betty's means-tested care fees.
• Potentially losing a portion or all of Betty's pension, as her assets would now exceed the threshold.
• Rapid depletion of Betty's financial resources, especially if she needed long-term care.

• Capping the home’s value: Under aged care means-testing rules, the home’s value is capped at $201,231.20 (as at 20 March 2024) if it is not sold, regardless of its actual market value. This greatly reduced the means-tested assets, lowering Betty’s fees.
• Preserving the pension: By keeping the house, Betty’s assets remained low enough to allow her to retain her full pension.
• Using rental income: The advisor helped the family structure the rental agreement to generate income, which was then used to pay for Betty’s aged care fees. This provided additional cash flow without the need to dip into other savings.
• Tax benefits: Rental income, while taxable, can often be offset by allowable deductions, such as maintenance costs and depreciation of the property. This minimized the tax liability on the rental income.
• Outcome: After two years, Betty passed away. The family then sold the house at market value ($1.2 million by then) and was able to retain a significant portion of the estate, which would have otherwise been consumed by aged care fees had they sold it earlier.

Betty’s family initially thought they needed to pay the advertised RAD of $500,000 when placing her in aged care. They had approximately $1 million in assets, mostly from the sale of a secondary property, and assumed paying the default RAD was their only option. Without expert advice, they would have:

• Paid $500,000 for the RAD, leaving $500,000 in cash.
• The remaining $500,000 would be fully assessable for aged care means-testing, leading to higher daily accommodation and means-tested fees.
• Betty’s pension entitlement would have been greatly reduced, as the means-tested assets would now be significantly higher than the pension asset threshold.

With guidance from our aged-care financial advisors, Betty's family negotiated a higher RAD of $800,000, leaving only $200,000 in liquid assets. The benefits of this approach were:

• Reduced means-tested assets: By paying a larger RAD, the assessable assets were reduced to $200,000, which is much lower than the full $500,000 they would have otherwise had.
• Retention of the pension: With lower assessable assets, Betty was able to retain her pension, which amounted to around $25,000 per year.
• Refundable deposit: The RAD is refundable upon passing or leaving the aged care facility. By paying a higher RAD, the family could expect a larger lump sum refund, which would eventually be returned to the estate.
• Lower daily fees: By reducing the means-tested fees, the family saved approximately $30 to $40 per day, resulting in annual savings of around $10,000 to $15,000.
• Outcome: The family saved on ongoing care fees and preserved a larger portion of their assets in a refundable deposit, which would return to the estate upon Betty’s passing.

Both parents, Mary and John, were preparing to enter aged care. The children assumed they needed to sell the family home, which was worth $1.5 million, to cover the costs of care. By selling the house immediately, they would have:

• Increased their assessable assets to $1.5 million.
• Lost their pension entitlements due to the asset value exceeding the threshold.
• Incurred significantly higher means-tested care fees, as the full asset value would have been used in the assessment.
• Faced rapid depletion of their financial resources, possibly leaving little inheritance for the family.

Our aged-care financial advisors recommended a strategy where John entered aged care as a supported resident, and Mary remained in the home. The key aspects of the strategy included:

• Supported resident status: By having John classified as a supported resident, his care fees were kept lower while Mary continued living in the home.
• Delay in selling the home: The advisor suggested delaying the sale of the home for two years. Under aged care means-testing rules, the home’s value is capped at $198,500 if it remains unsold and is occupied by a spouse.
• Asset preservation: After two years, Mary entered aged care, and the family was able to sell the house at market value. Because of the two-year delay, the family saved significantly on means-tested fees.
• Outcome: By delaying the sale of the house, the family reduced assessable assets and saved on means-tested fees. When the house was eventually sold, the family was able to preserve a large portion of the estate for inheritance.

Peter's children were faced with choosing between two aged care facilities for their father. One facility charged $60 per day for extra services, which included access to a hair salon, a pool, and premium meals. Peter did not require these additional services, but his family assumed that extra services were standard at all facilities. Without advice, they would have:

• Agreed to pay the extra services fee of $60 per day.
• Incurred an additional annual cost of $21,900 ($60 x 365 days).
• Paid for services that Pater did not need or use, such as premium dining options and access to a pool.

Our aged-care financial advisors helped the family compare the two facilities. They opted for the facility without the extra services fee, saving $60 per day. And potentially the $21,900 per year could be saved or used for other necessities. Over time, the family saved:

• Annual savings: $21,900 per year by choosing the facility without unnecessary services.
• Total savings over four years: If Peter lived in the facility for four years, the family saved a total of $87,600.
• Outcome: The family was able to select a high-quality facility that met Peter's needs without incurring unnecessary costs, preserving their financial resources.

When Ann entered aged care, her children were told they needed to pay the full RAD of $500,000. They had $600,000 in available funds, and without advice, they would have:

• Paid the full $500,000 RAD, leaving only $100,000 in liquid assets.
• Struggled to maintain cash flow for daily expenses and ongoing care costs.
• Risked depleting their cash reserves quickly, possibly leading to financial stress.

With guidance from our aged-care financial advisors, the family negotiated a partial RAD of $300,000 and using the remaining $300,000 to cover ongoing daily accommodation payments (DAP) and other care expenses. The benefits of this approach included:

• Balanced cash flow: By paying only a portion of the RAD upfront, the family retained $300,000 in cash, ensuring they could manage daily expenses and care costs comfortably.
• Flexibility: The family had the flexibility to adjust their financial strategy over time. If Ann's care needs changed, they could revisit the RAD payment and pay more if necessary.
• Outcome: The family was able to maintain liquidity while still meeting Ann's care needs. This approach avoided the potential cash flow issues they would have faced had they paid the full RAD upfront.