Preparing for Aged Care

I hate to be the one to say it, but we’re all getting older!?I’ve been preparing financially (and emotionally) for my own elder years which includes aged care for quite some time, and I’ve been helping the older folks in my life as well.

If you are an adult child, niece or nephew looking out for your ageing parents and relatives or you’re a parent or relative yourself staring down the later years of your life, you’ll know it can be difficult to talk about what the future might hold.?In this article, I cover FIVE aged care matters that really need to be discussed sooner, rather than later.?

For many of us, we’ll be part of what is known as the?Intergenerational Wealth Transfer.

It has been widely reported to involve some $3.5 trillion in family money that will move from the remaining Great Generation (people of WWII era) and Baby Boomers to younger Australians by 2050.

While everyone agrees that’s a lot of money, the other commentary around this ‘great wealth transfer’ indicates we’re not very good at it.

According to this article,?Perpetual, who interviewed social commentator Bernard Salt AM and a couple of other smart guys, say that up to 70% of all wealth transfers fail.

In my experience, the key to planning our aged care, wealth transfer or farm succession is to give everyone time and space to consider what they really want.?

It’s an unfortunate fact that ageing diminishes capacity and decision making ability, so it’s important to shore up your future while you’ve still got all your marbles.?

For those offering support, be mindful that these are your parents’ decisions, so don’t be tempted to?tell?them what they should do or you might find they’ll stop telling you about their plans!

However, there are some practical and necessary topics of discussion that should be considered if you’re warming up to a much bigger conversation. I suggest starting with these:

1: Wills & Enduring Powers of Attorneys

It’s surprising how many people I meet who don’t have a will, and of those who do, it’s often well out of date.?

It’s important to ask your parents and older relatives if they have a will, and when was it last updated. If it was a few years ago, then things have probably changed. Beneficiaries may have passed away, divorced or married and new family members born.?These changes may no longer reflect your wishes or they may even open up opportunity for your will to be contested.

A Power of Attorney and an Advanced Care Directive are the other must-have documents and not just for those who are getting on in age.?

We all need trusted people with the authority to make decisions about our wealth and health when we can’t.?

It seems obvious, but it’s also important to know where these important documents are kept.???

2: Aged Care Planning

If you, or your relatives, are in your 70s or 80s and still living at home, organise a visit from the Aged Care Assessment Team (ACAT).?Even if you’re doing well, the assessment waiting times are long and once in the system, care options can be made available to you if you suddenly need extra help.?

You can find out more by visiting the Government’s?MyAgedCare?website.

3: Downsize

It’s easy to accumulate a lot of stuff throughout life. While some of it is precious, a lot of it just takes up space.?While you are fit and well, start the process of culling and of course, consider giving important or valuable items to those you love while you’re alive so you can enjoy the moment together.?

If downsizing includes selling a large family home so you can move into something more suitable, the superannuation ‘downsizer’ rule enables homeowners to contribute up to $300,000 each from the sale proceeds to super without penalty.?From December 15, 2022 the downsizer eligibility age was reduced to 55 years.??

4: Will you or your parents have enough?

This a delicate discussion for everyone and you may need to involve a third-party financial professional (like me) to help you understand your financial big picture or that of your parents’ if you’re guiding the process.?

The purpose is to know, rather than guess.?

Then if your aged care finances fall short, you can consider your aged care options and if you need financial assistance from family members, they’ll have opportunity to plan in advance.

5: Succession Planning

For farming families the ‘transfer’ concept is nothing new. Intergenerational farming businesses have navigated the process and the challenges that come with it for decades. Those who have experienced it will attest, much like aged care planning, farm succession needs to begin early to allow discussion and time for everything – financially and emotionally – to be put in place so that the eventual transfer is successful.?You can read more about succession planning?here.

Next steps

These are often difficult, but nevertheless necessary discussions and they need to be handled with compassion. While we can do nothing about growing older, we can take action that will help us and those we love to have an aged care life of choice.

If you or the older folk in your life need help planning for aged care, please feel free to give me a call on 08 8253 2906 or email?[email protected].

Phillip Dibben is a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.

This information does not consider your personal circumstances and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.