Our Client
Mr and Mrs L had been living in a retirement village. All was going well until Mr L’s failing health meant that he began to rely on his wife more and more for help with his normal daily care needs. As a result, Mrs L’s health also started to deteriorate and they were both eventually admitted to an Aged Care facility for a period of respite. It was hoped this would provide an opportunity for both to recuperate and return home, but Mrs L enjoyed herself so much in the facility, she decided she didn’t want to leave. She felt liberated from the constant needs of her beloved and the daily grind of keeping their lives running. The situation was discussed with the management of the Aged Care facility who provided the family with a price for two permanent places and a time limit to get things sorted out.
The family were desperate for help.
The Issues
Money was a problem. Whilst the cost of placement was fair, the couple’s assets did not cover two full placement fees (Refundable Accommodation Deposits or RAD) of $400,000 each.
Their unit in the retirement village would need to be sold and they were told that there was some buyer interest, but sale of retirement village units can be a long slow process. Moreover, whilst valued at $710,000, 30% of the sale price was to be retained by the village. In addition, 3% commission was payable to the village for the sale of the unit and a further $15,000 to $20,000 would be charged for refurbishment in preparation for the next owner. This meant that Mr and Mrs L would receive around $460,000 from the sale price of $710,000 – a cost of $250,000. They had around $50,000 in other saleable assets and that was it. Their ability to meet the RAD payments was going to be extremely tight, both in the short and long term and the family had no idea how they were going to do it.
The paperwork necessary for government assessment of Mr and Mrs L’s financial position had not been completed. This meant that the Aged Care facility could not get the placement or the fees finalised. However, we saw that it also provided us an opportunity to have the couple assessed as ‘low means’, resulting in a saving on the Refundable Accommodation Deposits of nearly $200,000 each.
They had a tight time limit.
This time in a family’s life is usually stressful and highly emotional and this was certainly how we found Mr and Mrs L’s children and grandchildren. The family were stressed and did not know where to start to get things sorted out and their parents/grandparents safely and happily placed in the Aged Care facility of their choice. No one in the family had spare money to assist, even in the short term.
The Solution
Initially we met with the family representative to discuss the situation in detail and by the end of that first meeting we were able to provide them with an interim plan of action just to keep things going financially until a longer term plan could be devised. We agreed that the long term plan would be presented in a Statement of Advice.
The advice document was written within a week and it outlined in detail, the options that were available and the steps the family needed to take to meet the tight time limit. It also directed them as to the best approach to take to minimise the fees payable to the Aged Care facility and to improve their parents’ ongoing cash flow. It provided both capital and cash flow outcomes of each of their options. It took a situation that had at first appeared almost out of their reach over the longer term, to one that gave them plenty of room to move. It also provided the whole family support and a clear path forward. We met with the family again to go through the advice to ensure they understood the options and recommendations made. It was quite a relief for them to see that it could be done.
With their decisions made, we provided direction with completion of the relevant government and Aged Care paperwork and assisted with the liquidation of the parents’ investments so debts could be paid and ongoing costs of living could be met.
As a result of our work, a reduced Refundable Accommodation Deposit of $206,000 each was achieved, all necessary paperwork was completed correctly and Mr and Mrs L now have permanent placement in the facility of their choice. It was a great outcome for the whole family.
