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As the proverb goes, ‘a little knowledge is a dangerous thing’. With much information floating on the internet or a gathering among friends and family, clients sometimes make decisions based on incomplete information which can unfortunately lead to detrimental and sometimes irreversible outcomes.
When a person enters aged care, they are faced with a plethora of rules – to name a few, concerns relating to social security payments, aged care fees and funding decisions, including what to do with the family home are often front of mind.
To join the dots in making an informed decision requires holistic knowledge and highlights the importance of seeking financial planning advice. In seeking advice, one has the peace of mind that informed decisions are made and given the many nuanced legislative rules and opportunities, optimise their position when relevant.
Over the years in the journey of assisting with provision of aged care advice, there have been a few common themes of aged care myths, tips and traps amongst unadvised clients. The article that you can access below, discusses some of these myths, tips and traps in an endeavour to highlight for awareness, which include:
- Not knowing that the price for a room can be paid in any combination of RAD (lump sum) & DAP (interest on the unpaid lump sum).
- Thinking that RAD price is non-negotiable when it could be worth asking the question.
- The cashflow issues caused by the Means Tested Care Fee (the co-contribution based on means) annual cap not being subject to an annualised averaging.
- A lower Maximum Permissible Interest Rate (the interest rate on unpaid lump sum) not necessarily being advantageous when considering low means residents.
- Financial hardship applications when majority of the monies are tied in RAD / RAC and minimal liquid assets.
- Myth that aged care entry means that the main residence has to be sold as a default option: may indeed be the case for some clients depending on funding decisions, but doesn’t need to be the one and only option by default.
I am sure there are unfortunately many other scenarios which have acted as a trap for unadvised aged care clients. I would love to hear from you to see whether you have had clients in similar circumstances and whether you have come across other myths, tips and traps in addition to the 10 we have outlined in this article.
Access the full article here.