The journey into aged care can be emotionally and financially challenging. One of the most difficult decisions is whether to sell the family home to fund aged care costs. This decision often triggers fear and uncertainty, leading many families to go to great lengths to keep their home.

Sonia Dallimore, a seasoned financial planner at Vista Financial Group, sheds light on the financial complexities of transitioning into aged care for homeowners.

Who should you take advice from?

The initial step in this journey is identifying the right source of advice.  

Financial planners can offer services in all areas of advice, however there are financial planners that specialise in providing aged care advice. These planners are well-versed in aged care and can provide informed guidance. While accountants are experts in their domain, they often lack specialised knowledge in aged care and are restricted by regulatory constraints in the advice they can offer.

Aged care facilities may have a deep understanding of financial strategies, but their primary focus on occupancy and profitability could potentially skew their advice. Therefore, it might be beneficial to consult neutral entities such as Centrelink Financial Information Service officers. However, it’s important to note that they can only provide general information and cannot recommend personal financial strategies.

Bottom line, a financial planner specialising in aged care advice, is best positioned to determine what to do with the home, to best meet the needs of the aged care resident.

Can I hide the value of the home?

Financial means testing is a critical factor in determining the financial responsibilities of individuals entering residential aged care in Australia. This involves a combined assessment of income and assets. The family home often makes up a significant portion of an individual’s assets and could lead to higher means-tested care fees or accommodation costs when included in the assessment.

Some families try to hide the value of the family home from means testing by transferring it into the name of a family member or friend. However, this strategy is complex and risky. Assets gifted above certain limits remain subject to assessment by Centrelink for five years. This in turn means that this sum will then also be assessed for applicable aged care fees when entering and residing in an aged care facility. Therefore, unless the home has been transferred into someone else’s name five years before seeking aged care, Centrelink will still consider it as an assessable asset and means test its value accordingly for both Age Pension entitlements and applicable aged care fees. The end outcome may potentially result in reduced Centrelink Age Pension benefits and still having to fund an applicable Accomodation Payment (or commonly referred to as a Refundable Accomodation Deposit) and higher means tested aged care fees – but with no sum available to fund said aged care fees. Not such a good result - for attempting  to hide the asset!

Furthermore, while reducing assets from means testing might seem appealing to some, as this may mean that the individual could qualify for lower fees or subsidies, thereby preserving more of their assets for inheritance or other purposes, the reality of the outcome is that it can affect the quality of the aged care experience for the person entering into aged care. If the government funds your entry into aged care, you may face longer wait times to find a place, and the quality of the room may be lower, limiting your choice of facilities. This may be suitable for some, but not for others.

In Sonia Dallimore’s experience - hiding the value of the home, usually doesn’t work (unless you have foresight to act 5 years before the person enters into an aged care facility) and even then, reducing assessable assets may impact on the aged care experience, by limiting choice on where the resident can reside. The best approach is, to be open with financial information, and to apply the use of assets, to get the best possible outcome for the person to reside in the aged care facility.

Seek advice from a Financial Planner – specialising in aged care advice

The family home is often a symbol of the owner’s hard work and holds deep sentimental value for families. However, the quality of care and how the aged care facility environment matches the needs of your loved one should always be the top priority.

Everyone’s financial circumstances are different, but if you’re upfront and disclose the full financial and personal circumstances to a financial planner specialising in aged care advice – like Sonia Dallimore at Vista Financial Group, the best options available will analysed and tested, and will become clear.