Attwood Marshall Lawyers Wills and Estates Associate Larisa Kapur joins Robyn Hyland on Radio 4CRB to discuss some of the key considerations for those making the move to aged care or looking at downsizing the family home.
Introduction
Over the past 20 years, the population of people aged 65 years or older has increased significantly. The Australian Bureau of Statistics has reported that over the past two decades the population of people aged 85 years or older has increased by 110 per cent.
For those whose current home no longer suits their lifestyle and medical or health needs, the decision of where to live next is an extremely important one.
With an aging population and the ongoing aged care crisis in the spotlight, there will be many people that are ready to enter that next stage in their life which involves the transition to care, but are uncertain where to start. We often see clients that have limited knowledge or information on the different living options available to them, or how complex the issues can be from a legal, financial, and health perspective.
For those looking to downsize their home or find more suitable living arrangements, there are several options available – such as moving to a new private home, or a residential park, retirement village or aged care facility. It is important to understand the differences between these options and to get financial advice and legal advice from an experienced and accredited Aged Care Professional before signing any contracts. A lawyer specialising in aged care arrangements will be able to properly assess the fairness of your residence contract and make sure the terms and conditions marry up with your wishes and your understanding of your new way of life.
Downsizing – the options
There are four main options for people looking to downsize, depending on their lifestyle and whether they already require a certain level of care – or know that they will want to receive care as they age.
They are as follows:
A private home
The family home may be sold to downsize to buy a smaller, more appropriate private home which requires less maintenance, and perhaps is only a single level with no stairs.
While remaining at home for as long as possible is a priority for many people, it’s important to note that the maximum in home care package offered by the government equates to about 2-3 hours per day of care. If someone needs more care than this, then in home care may not be the best option.
A residential park
A residential park is accommodation where you can rent the land under a site agreement, and you provide your own home.
If it is a mixed-use residential park, you may be able to have a manufactured home, caravan, or cabin on the land you rent. If it is a purpose-built residential park, there are usually manufactured homes already on site which are targeted at over 50s.
Residential parks are managed by a park owner or manager, and they usually have common areas and facilities for residents such as pools.
Site agreements are binding contracts, and you should be fully aware of your rights and responsibilities prior to accepting the terms under these types of contracts. Important things to consider include how many people can live in the manufactured home at the site, the location and size of the site, rent details (including how to pay, how many people the rent covers, how the amount may increase, including market rent reviews or by order of the Queensland Civil and Administrative Tribunal), how utilities are billed, and whether pets are allowed – to name just a few.
A retirement village
Retirement villages are premises where a community of seniors live independently, whether it be in a unit or a serviced apartment. Often, shared common facilities and amenities are available for use, such as pools, gymnasiums, recreational rooms, etc., and access to help with personal care and support services can be arranged for an additional fee.
Retirement villages do not receive government funding and by buying into a retirement village you are self-funding your unit. However, living in a retirement village is not the same as owning your own home, and you may face substantial costs when leaving the facility, in the form of an exit fee. In most cases, you do not purchase the property title. Instead, you purchase a right to live in the unit and the right to access the lifestyle facilities the village offers.
You must understand your financial and legal obligations before signing anything. It is important to note that there are various payments you will be required to pay such as general services charges related to management, general maintenance, recreation facilities and other services written in the contract, as well as personal services charges, exit fees, shares in expenses from reselling your unit and any other costs outlined in the contract.
Aged care facility
Aged care facilities are suitable for people who can no longer live in their own home independently. Aged care may be the best option if you need that next level of care and services to provide a safe home environment. There are varying levels of services offered in aged care homes. Some may provide continual nursing care, while others provide mainly accommodation and personal care, with occasional or limited nursing care.
Some homes specialise in looking after people with specific needs, such as people with dementia. Others provide palliative care for people who have a life-limiting illness to maintain the best possible quality of life.
It is extremely important to do your homework when choosing the right aged care facility for yourself, or a loved one. A 5-star rating system now applies to residential aged care services, which can be a good place to begin your research.
The ratings system looks at whether an aged care facility is meeting government standards and regulations. Ratings take into consideration quality of care, safety, financial matters, and management of the facility. If a facility has a 5-star rating, it means there have been no non-compliance decisions for 3 years and the facility has been granted accreditation for a 3-year period.
How to decide
One of the first steps to downsizing the family home or transitioning to aged care is usually to contact “My Aged Care” and arrange an assessment. The assessment is designed to understand your support needs and to work out what types of care you may be eligible for.
There are two types of assessments:
- A home support assessment, which will apply to people who may need low-level support to stay independent in their home
- A comprehensive assessment, which will assess if you have care needs that are greater than what the Commonwealth Home Support Programme can offer. This type of assessment will include looking at the opportunity to apply for a Home Care package, short-term care options, and aged care homes.
Here are some key questions you should ask yourself as you weigh your options:
- Do you plan to live alone, or will you still have someone else living with you?
- Are you able to keep up with going to your medical appointments, maintaining your home hygiene, maintaining a healthy diet, etc.?
- Will you require support services?
- How will you fund the arrangement?
These are important questions to ask as they may redirect where you will look at living.
Final check on the contract and time to update your estate planning (Will and EPOA)
Once appropriate accommodation has been found or considered, it is imperative to ensure an experienced lawyer runs through any agreements or contracts BEFORE you sign anything.
Retirement village agreements, for example, have been referred to as one of the most complicated finance contracts in Australia. These documents should not be underestimated. They are extremely lengthy, difficult to interpret, and have lots of hidden terms and conditions and fees.
Many people go it alone and enter into these agreements without getting legal advice, only to be met with a rude shock down the track when hidden fees or charges come to the surface, or restrictions on how you can live in the accommodation become known and the resident is no longer happy living there.
There are conversations that should be had before deciding what type of living arrangements work for you, particularly while you are of sound mind.
That includes a chat with a qualified financial planner and potentially even an accountant to really understand your financial and tax position prior to making any decisions. The new arrangement must meet your expectations – and be something that you can financially afford now and into the future.
The advice given will depend on individual circumstances of that person, their financial position and what type of living arrangement they have selected.
Many people don’t realise that when you sell your home to transition to aged care, the proceeds of sale will become part of your asset pool for Centrelink purposes, and this may affect your pension.
It is also important for your estate planning to be in order, including the appointment of your power of attorney. It’s very important – and often a requirement – to have an Enduring Power of Attorney when entering a retirement village or aged care facility.
If you have sold the family home to fund your new living arrangements, this might impact your estate plan and your Will should be updated to reflect the change in your assets.
Attwood Marshall Lawyers – helping people through every stage of life
At Attwood Marshall Lawyers, we know that the differences between the living arrangements that offer care and support for aging Australians can seem confusing or overwhelming when they are first presented. As lawyers who work in aged care and estate planning, we are passionate about helping people make informed decisions, educating the community about all the options available and what to be aware of when making such significant changes to your lifestyle. Not only are our lawyers experienced in the area of estate planning, we also have accredited aged care professionals who specialise in this very complex area.
There are high emotions attached to selling the family home, and financial concerns may be playing a part, as well as not being entirely sure which facility is right for you.
But there is support available to help you understand what it is you need and the next steps to take.
Trusted legal and financial advice from an accredited aged care professional is key to covering all your bases and ensuring your best interests are being protected – no matter what you decide.
If you or a loved one needs legal advice about transitioning to aged care or reviewing service agreements or an estate plan, please contact our Wills & Estates and Aged Care Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 at any time.
