Aged Care Financial Advice and Selling the Family Home [Radio Interview – 2UE]
The Donaldson Sisters from Aged Care 101 interview Phil Reid from Sydney Aged Care Financial Advisers on the aged care financial advice process and whether it is necessary to sell the family home when looking at moving a loved one into aged care.
Annie/Jill: The money side of aged care really seems to have a lot of people totally bamboozled out there, especially when it comes to finding the money to move into a nursing home. It’s complex and it is expensive. There’s often a big money involved, you know. Sometimes, people need to find anywhere between $500,000 up to million dollars. And you know, I think we need to get into the bottom of this and have a little bit of clarity and to do so, we asked Phillip Reid, who is a Partner and Senior Financial Planner for Sydney Aged Care Financial Advisors, just to talk to us a bit about, you know, how to finance aged care costs. Hi Phillip and thanks for joining us this afternoon.
Phillip: Thank you.
Annie/Jill: Hi Phillip. Now, five years ago, you never heard about financial advisers when it came to the aged sector and money. What’s changed?
Phillip: I think it’s a fair point. It’s a very… a growth industry. I think the demand from consumers is what has changed. And many more planners now are interested in the spice because they are getting inquiries from their long outstanding clients. We’re living longer and the demand is certainly there.
Annie/Jill: So can you just walk us through how the process works? If a client comes to you for assistance as to how they can afford aged care financing for themselves or for their parent. What do you do?
Phillip: Yeah, we encourage them to pick up the phone and call the office and talk to us about their situation and we will pretty quickly work out whether we are able to help them and if we are able to help them, we will involve them to meet with us. There’s no obligation of cost. You can have a chat for us for an hour and we’ll see if we can assist you. We talk you through what we think your options are, primarily around the family home and going to care and how you fund the movement into care. If you are happy with that process, we would then engage you and send you a letter of engagement. We will send you our fees, so we would agree on that fee upfront. As we send you the letter of engagement, we would go on to work for you and we’d come back to you with your options on how you pay for your care.
Annie/Jill: And you’re talking about the family home. Do most families in your experience choose to sell the family home to be able to afford financing aged care costs?
Phillip: Yeah. I think it’s a case by case scenario, but certainly, in the recent 12 months, we have noticed that normal families are selling the family home to fund going into care and I think it shifted a little bit from previous years where they are a bit reluctant to sell the homes. There’s new rule in relation to the rent from the family home from the 1st of January this year.
Annie/Jill: And what’s that?
Phillip: The rent is now assessible in terms of your aged pension, but previously it wasn’t.
Phillip: So the rental income now is going to have an influence in your aged pension so it becomes less attractive from a cashflow perspective to keep the home.
Annie/Jill: In the past, people have been advised to rent the family home? In order to pay for their aged care fees?
Phillip: Yeah, precisely.
Annie/Jill: Just getting back to the family home. If the family is the one selling for parents, what are the rules around that? You have to have, there’s somebody in the family to have a power of attorney. Is that right?
Phillip: Yeah and it’s a really good point. We have to deal with a power of attorney and highlight the need for the family to be a little bit organised and ensure that they do have those things in place before it’s too late.
Annie/Jill: So your best advice to people would be?
Phillip: I think there’s two parts in that question. The firs part is the emotion part. It’s really hard for people to accept that they are going to care and they can no longer be able to look after themselves so that’s an issue for the family that’s best addressed as early as possible, you know, to get that message across. The second part is the money part. How much is it going to cost, how are we gong to fund it, what are their options, and that’s where financial planning and help the family understand what the financial impact of going to care.