If both members of a couple are in aged care and one of them were to pass or if one is in care and the other at home (but the one at home passes first) then if they have left assets to the survivor, then the aged care fees for the survivor are highly likely to increase significantly. Any pension entitlement received from Centrelink or Department of Veterans Affairs, may be significantly reduced or lost completely. Consequently, the cashflow consequences (affordability) of aged care could be negatively impacted. 

Consider the example scenario. 

Syd (94) & Daphne (89) 

Syd and Daphne entered aged care permanently in 2021. Daphne was a Partially Supported Resident, paying the maximum accommodation contribution as a lump sum of $344,118. Syd was an unsupported resident and paid an accommodation payment of $850,000 as a RAD (lump sum) after selling their home. 

Syd and Daphne left their respective estates to each other if they were to pass way. When Syd passed away, Daphne would have lost her Aged Pension completely ($29,023 per annum), her aged care fees increased by $15,800 per annum, therefore Daphne would have been $44,823 per annum worse off and generated a cashflow shortfall of $11,142 per annum. 

If Daphne spoke to Balance prior to Syd’s death, Balance would have been able to help Daphne with some estate planning with the help of her solicitor, which would have saved Daphne’s age pension, saved $18,867 per annum in aged care fees and have a cashflow surplus of approximately $34,162 per annum; a total saving of $45,304 per annum. If Daphne were to live another 5 years, her estate would have received an extra $247,000. 

Note: The savings in the example might not be able to be achieved; it is dependent on the financial situation and the capacity of the resident to be able to make changes. However, there can be significant financial benefits for those who are able to take advantage of some estate planning changes. 

Balance is offering a new service for our clients – to review their estate planning options that are available to anyone in care (especially couples), where we will review the estate planning that is in place. So, if one were to die, we can consider alternative strategies that might save a significant amount of money which could make aged care more affordable for the survivor and increase assets left to the beneficiaries of the survivors’ estate. 

If you would like to know more, call Balance Retirement and Aged Care Specialists on 1300 556 287.