Rachel Lane Q&A

Rachel Lane

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Rachel Lane

Rachel Lane explains the ins and outs of retirement living and aged care like no-one else. Her ability to break down complex arrangements and explain the pros and cons is embraced by millions of readers and she frequently speaks on radio and television. As Principal of Aged Care Gurus she oversees a national network of specialist financial advisers. Rachel holds a Masters in Financial Planning and has written several books including the best seller “Aged Care, Who Cares?” Her engaging explanations of the ins and outs of financing retirement living and aged care are embraced by thousands of readers of Australian Carers Guide. In this exclusive Q&A, Rachel answers some of your most pressing questions, addressing the financial side of caring for a loved one.

Q: I am 57, my partner 78. I have been caring for him the last 3 years full time, currently receiving the pension. I am looking to do whatever is necessary to keep him at home with nursing care. He will receive an aged care package. I have a unit which we don’t live in as it’s unsuitable due to my partner’s disabilities, however it will be counted as an asset which means I will need to dig into my super to pay any difference. We will probably use all my super, which I won’t be able to recuperate at my age. It feels very unfair that all partner rules are based on assumption of relationships, and that I’ll have nothing to assist me with my losses in the future.

Rachel Lane: You should definitely seek advice about your circumstances. It is possibleto have your home excluded from the pension asset test if you need to leave to access care (that care is not restricted to only aged care homes). When it comes to your partner’s home care package, know that you can negotiate the Basic Daily Fee with the provider (many will waive the fee if it is going to cause financial stress). You can also apply for financial hardship from the government.

Q: My dad has moved into dementia care and has been rated low means. Meanwhile, my mum is now unable to look after their house and is looking to move into a retirement village where she will purchase a unit. How does the house sale affect dad’s low means rating? What amount from selling the house is assessable? Is it only half the difference between sale price and the cost of new home? Mum still needs money to live, so is it all exempt until she sells new home and moves into residential care?

Rachel Lane: Your Dad’s low means resident classification won’t change while he’s living in that aged care home. However, the amount he can contribute will be recalculate based on the change to his means. Depending on the change to his assets and income, there can be a recalculation of his accommodation contribution and he can start paying a means tested care fee. It’s impossible to say what that would be without knowing the numbers. If his assessable assets changed by $100,000, his accommodation contribution could change by $17,500 per year. It is definitely worth seeking advice from a specialist adviser to understand the full picture before your Mum makes a move.

Q: My dad owns the family home and is the only one on the title. My mum and dad have been married for and lived there for 55 years, and neither of them have any other assets or cash. My dad has gone into aged care, my mum is still in the house but will need to go into aged care. What will happen to the house?

Rachel Lane: When it comes to aged care couples are assessed 50/50 on their assets and income regardless of who legally owns them. The house will not be included in your dad’s assessable assets as your mother is still living there so it is exempt. The means assessment will look at his half of the assets and income outside the home. If your Mum moves into aged care then half of the house will be assessed against each of them unless a protected person (such as a carer or close relative is still living in the home).

Q: My mum needs to go into an aged care home soon. She owns her unit which is worth $600k. Does she have to sell unit?

Rachel Lane: Firstly, if a protected person such as a spouse or in some cases a carer or close relative lives in the home, it is exempt. If the home is assessed, it is only included up to a capped value of $201,231.  You don’t have to pay the accommodation cost as a lump sum, you can pay it by daily payment or by a combination of lump sum and daily payment. It is worth seeking advice before you sell the home and pay the RAD as it can affect the cost of aged care as well as her pension entitlements, cash flow and estate planning.

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happiness asian family candid of daughter hug grandparent mother farther senior elder cozy relax on sofa couch surprise visiting in living room at home,together hug cheerful asian family at home

Q: My mother has her own home as my father has passed away. Does this mean she won’t have to sell her home or use it to move into an assisted living home in Queensland? She’s just turned 79 but still doing well. I ask as her health may change. My siblings are trying to get her to sign the house over to one of them, so we won’t lose the house if she has to go into a home. I’d like the house to stay in her name. What’s the best option?

Rachel Lane: To work out the best option you need financial advice. Signing over the house can have serious financial consequences on your Mum’s pension and aged care costs, it can also have serious financial consequences on the person that she transfers it to including stamp duty and future CGT implications amongst other things. The other often unintended consequence of strategies like this is that it may mean that your Mum’s choices when it comes to an aged care home are reduced. It is definitely not something you should undertake without considering all of the potential implications.

Q: My mother and father have moved in with me and their house is on the market for $540k. They have very little savings – maybe $6,000. Both are on the pension. My mum is on a level 4 aged care plan, and my dad is on a level 2 and is her primary carer. I am concerned that they will lose both their pensions and the aged care support if the house sells.


Rachel Lane: Firstly, access to aged care is based on their care needs not how much money they have so please don’t worry that your parents are going to lose their home care packages.When it comes to their pension, as a couple (non-homeowner) they can have $693,500 in assets before their pension reduces under the assets test. The point at which their pension is lost is $1,254,500. Under the income test they can earn $360 per fortnight before their pension reduces and it cuts out under that test at $3,725.60 per fortnight. Assuming they end up with $546,000 in their investments they will be slightly over the income test ($35 per fortnight) and their pension will reduce (by around $17 per fortnight). I think it would be worth seeking some advice about whether it is a good idea to sell the home not just from a pension point of view but what that would mean if your mum or dad (or both) needed to move into aged care, and if you do sell what to do with the money from the sale. The numbers I have given you above are just the starting point, I expect the deeming rates will go up in July and the reduction in their pension could be greater from then, selling the house versus keeping it could have major differences in what they pay for their aged care.

Q: My father has passed away and my mum is in the early stages of dementia. She has bought into a low care facility in WA. Could you tell me why Centrelink class her home as asset, when her home with my dad wasn’t? My mum sold the house to buy into the facility.

Rachel Lane: It sounds like the “low care facility” you are talking about is actually a retirement village and your mum has bought a unit for less than $242,000, which means she is classified as a non-homeowner and the home is included in her assessable assets. As a non-homeowner her asset test threshold is $242,000 higher so there is no real detriment from that point of view, and in fact the benefit can be that as a non-homeowner she can qualify for rent assistance on the ongoing village fees. The thing that normally causes pension problems is the money left over from selling the home and buying the new one – if that’s the case it’s worth seeking advice – as to be eligible to get rent assistance she would need to get at least some pension.

Australian Carers Guide does not provide financial advice, please speak to a financial advisor, like Rachel Lane, before making any financial decisions.

About Rachel Lane

Rachel Lane explains the ins and outs of retirement living and aged care like no-one else. Her ability to break down complex arrangements and explain the pros and cons is embraced by millions of readers and she frequently speaks on radio and television. As Principal of Aged Care Gurus she oversees a national network of specialist financial advisers. Rachel holds a Masters in Financial Planning and has written several books including the best seller “Aged Care, Who Cares?”

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