Arguably one of the most significant decisions you will need to make in aged care planning is: “What should we do with the family home?”
However, if your spouse needs to go into aged care and you need to remain living in the family home a more relevant question here is “can we afford to keep the home?”
Why the family home matters
The home is more than an emotional asset, it has the potential to have detrimental financial implications on aged care fees and Age Pension entitlements.
What most people do not know
- Impact on aged care fees
Depending on your circumstances, your home can be treated as:
• An exempt asset
• A partially assessable asset
• An asset that becomes assessable in the future
- Impact on age pension entitlement
The decision to retain or sell the family home can significantly influence your Age Pension:
- Keeping the home – May help preserve some or all of your Age Pension entitlement in the short term but may have the potential to dramatically reduce or cease your age pension in the future, impacting long-term cash flow.
- Selling the home – Can free up capital in the short term but may increase your assessable assets, potentially reducing or ceasing your age pension if not structured carefully, impacting cash flow.
- Renting the home – Can generate additional income to improve cashflow and help fund aged care fees but income is assessable for aged care fees and aged pension purposes.
Timing matters
- Selling the home immediately is not always the optimal outcome
- It may pay to delay the sale to preserve entitlements
Obtaining personal advice from an accredited aged care specialist financial adviser can help you.
Impact on couples
When one member of a couple needs to move into residential aged care and the other remains living in the family home the financial outcome largely depends on the treatment of the family home. Running effectively two households, one in care and one at home can be costly, impacting cashflow.
What we see
We often see families making quick decisions under pressure and these are not always effective financially.
Working with our Accredited Aged Care Specialist, Emma Leith, can help you understand the financial implications of the transition to aged care.
For more information on how you may be impacted, please contact us on (03) 6234 4413 to book an appointment with Emma, our accredited aged care specialist financial adviser.This article contains general information only and does not take into account your personal objectives, financial situation or needs. You should consider seeking professional advice before making financial decisions