Financial advisory on structuring your assets for aged care

Do you need financial advisory for aged care? Looking for tips, including structuring your assets, to ensure a smooth transition?

You’ve come to the right place! Welcome back to the final instalment of our blog series on considerations to make before transitioning to aged care.

Today, we’ll look at how to structure your assets effectively. This crucial step can significantly impact your financial well-being as you enter this new phase of life. We’ve previously discussed the importance of researching aged care facilities, 4 ways to simplify your affairs, and key considerations for your family home.

Let’s dive into structuring your assets to maximise your financial benefits and ensure a steady cash flow.

Financial advisor tip 1

Maximising Centrelink entitlements and minimising aged care costs

One of the primary goals when structuring your assets for aged care is to maximise your Centrelink entitlements and minimise your aged care costs. Here are a few strategies to consider:

Refundable Accommodation Deposit(RAD)

Paying as much of the RAD as possible can help reduce your ongoing care costs. The RAD is a lump sum payment that covers your accommodation in an aged care facility. By maximising this payment, you can potentially increase the age pension you receive from Centrelink.  In addition to this, the interest rate used to calculate the amount of daily payment if you don’t pay the RAD is quite high so if you pay the RAD rather than a daily payment it’s effectively earning interest at a higher rate than any term deposit.

Purchasing an annuity

An annuity can provide a steady income stream while reducing the amount of assets assessed for both aged care and age pension purposes. This can help you qualify for higher Centrelink entitlements and lower aged care fees.

Managing the former family home

If you decide to retain your former home, it can be exempt from the asset test if a protected person lives there or for up to two years after you enter care.

Consider spending money on essential repairs or improvements that will add value to the property. This maintains the home’s condition and can be a strategic way to reduce your assets over the short term.

If there is no protected person in the property, it may be wise to sell this when the 2-year exemption period has finished.

Gifting and funeral bonds

You might consider gifting up to the allowable limits or purchasing a funeral bond. These actions can reduce your assessable assets and your aged care costs. Pre-paying for a funeral or purchasing a funeral bond can also provide peace of mind while reducing your assets assessed by Centrelink.

Financial advisor tip 2

Ensure regular cash flow to meet income needs

Ensuring you have a steady cash flow to meet your regular income needs is essential when transitioning to aged care. Here’s how you can set up your finances to achieve this:

Annuities and pension income

Setting up annuities or taking pension payments from a superannuation pension can provide you with regular payments to cover your living expenses. These reliable income streams can be structured to suit your specific needs.

Age pension and rent

If you’re eligible for the age pension, this can be a vital source of regular income. Additionally, if you retain your former home and decide to rent it out, the rental income can contribute to your cash flow, however, may affect your Centrelink income assessment for aged care and Age Pension.

Regular transfers from cash accounts

Maintaining a higher interest rate cash account and setting up regular transfers to your daily bank account can ensure you always have sufficient funds available. This strategy helps in managing your liquidity while also benefiting from higher interest earnings.

Financial advisory on structuring your assets for aged care

At Precision Wealth Management, our financial advisors understand that transitioning to aged care can be a complex and emotional journey. Our goal is to help you navigate this transition smoothly and ensure that your financial affairs are in order.

Do you have any questions or need personalised aged care financial advice on structuring your assets? Don’t hesitate to reach out. Call Precision Wealth Management today for expert guidance on aged care planning. We’re here to help you make informed decisions and secure your financial future.

DISCLAIMER – The information provided in this blog is general and does not consider your individual financial needs or objectives. It does not constitute personal advice. We recommend seeking out professional and independent financial, legal and tax advice which has been designed for your individual situation before acting on any information contained below.