Financial Care Services Newsletter
Volume 11 Edition 4 – 30 April 2021
Financial Care Services, the specialist adviser to seniors in transition to new lifestyles
Do I need a Will?
Your Will specifies whom you want to sort out your affairs and how you want your assets distributed after you die.
You are not compelled to make a Will. But distributions to your family could be smaller and slower to be paid, if you do not have a good Will.
What if I die without a Will?
The State government has rules about how your assets are to be distributed if you die without a valid Will.
Only close family members might be able to claim on your estate if you have not given proper instructions in a Will.
If no close relatives claim your estate then the State government would take your assets, like voluntary ‘death taxes’.
Why spend money on a good Will now when I am still young?
No one has a guaranteed minimum period of life on this earth.
Thus being ‘young’ does not preclude your dying quite soon.
You are not compelled to make a Will. But life could be less stressful for your surviving family if you did have a good Will.
A badly worded home-made Will could cost your family dearly.
Instead of remembering you with gratitude your family might just start fighting about your assets.
The estate could then be hit with substantial legal fees to resolve the disputes about how your diminished estate is to be shared.
Thus in the long run, paying a lawyer to draft a good Will could be less expensive than a muddled Will or no Will.
If you have assets then your family could benefit from your having a good Will. Having a good Will signed and safely stored, provides peace of mind even if you are younger and expect to live for another fifty years.
Alas drunk drivers and medical incidents can terminate a life without warning or respect for your young age.
How to get a good Will
The first step to getting a good Will is to think about how you want your assets distributed after you have gone.
You need to clearly specify who is to get what proportion of which assets. A good Will covers all of your assets and every potential situation.
The second step to getting a good Will is to think again and consider some ‘what ifs’.
What if you family had to sell your home to pay for your residential aged care?
None of us want to move into residential aged care but we must if we are too frail in body or mind, to continue at home.
Selling your former home to pay for residential aged care could frustrate your intentions and tear your family apart if your Will bequeaths your home to some of your children and your financial assets to your other children.
What if your partner goes before you do? Your Will needs to cover any and every order of death.
What if you take a new partner? Do you want to share your assets with your latest partner and/or your own adult children or your new partner’s children?
The third step to getting a good Will is to think carefully about whom you could trust to actually handle your estate after you have gone.
Honest reliable people are best for this role of ‘executor’. Precise names are needed here.
Then the fourth step to getting a good Will is to have a qualified lawyer draft a Will that reflects your preferences.
The final step to getting a good Will is when you are sure that your draft Will reflects what you want then you go back to the lawyer to sign your Will in front of two independent witnesses.
Remember that a ‘home made’ Will could be all you need to cause trouble for your family and make them spend money on lawyers rather than themselves.
Would my Will help manage my finances if I need aged care?
No, your Will only becomes operative after you have died.
Smart people appoint reliable friends or family members, to handle their finances during any period of physical or mental incapacity during their lifetime. You need an Enduring Power of Attorney for this.
So while you are consulting the lawyer about your Will, you could also do an Enduring Power of Attorney.
Your Attorney could negotiate the fees and sign the contracts for any residential aged care that you need and then deal with Centrelink on your behalf.
If you do not get around to granting an Enduring Power of Attorney before you become incapable of managing your finances then someone would need to ask VCAT to appoint an Administrator for you.
Your VCAT appointed Administrator might be selected from among your family or friends.
But VCAT could appoint the Public Trustee as your Administrator if your family and friends do not appear to be suitably reliable for this role.
The Public Trustee could charge commercial fee rates for this service.
Your VCAT appointed Administrator must submit accounts for your money and pay a fee to the Public Trustee every six months.
So please do yourself a favour and grant someone an Enduring Power of Attorney just in case you become frail later.
How is my Will used?
To ensure that only your last valid Will is actually used, the State government has a process to authorise your executors to collect and distribute your estate.
When someone dies the family need to contact a solicitor.
Either the solicitor already has the Will or the family need to take the Will to a solicitor.
Then the solicitor deals with the State government for a Notice of Probate to be issued to authorise the executors nominated in the Will to start their work.
If the Will is not a formal signed paper document and/or more than one Will is presented to the State government then substantial legal fees would be incurred before a Court determines how the remaining estate is to be distributed.
If no Will can be located then the person has died ‘intestate’.
You would need the help of a lawyer to navigate the maze of State government regulations to sort out the estate of a family member who died intestate.
In summary, if you love your family and/or you want some of your estate to go to charities then make sure that you have a good Will.
Remember a good Will is one that has been reviewed regularly and replaced whenever your life or family circumstances changed significantly.
Collecting the Refundable Accommodation Deposit or Bond paid to an aged care facility.
A Commonwealth regulated residential aged care facility must refund an Accommodation Bond or Refundable Accommodation Deposit, “RAD”, within fourteen days after an authorised request.
When an aged care resident chooses to live somewhere else
The two week period for refunding the RAD, or Bond, can start when the resident gives notice that she is moving out.
If she gives at least two weeks notice that she is moving to another aged care facility then her RAD could go with her on her planned transfer date.
When the aged care resident dies before her RAD is refunded
If the aged care resident dies before her RAD, or Bond, is refunded then it can only be refunded to the resident’s estate. Thus the refunded RAD is part of her estate and must be distributed according to her Will.
Or if she died without a valid Will then the RAD refund would be distributed according to the rules for intestacy.
In this case, the State government could possibly take the RAD refund if no close family are eligible to claim the estate.
What if the family had lent her the money for her RAD?
If a family member provided the cash for the RAD by means of a properly documented loan then usually the loan could be repaid from the estate.
But the RAD could not be refunded directly to the lender; it must go via the estate.
But if the RAD was paid from money borrowed informally by or from other family members it might not get back to them.
The aged care facility must refund the RAD to the estate of the deceased resident. The RAD could not be refunded directly to whoever put up the money for the RAD.
Thus an informal ‘loan’ or ‘gift’ of cash to pay the RAD was truly ‘gifted’ not just loaned. Without a proper loan document the RAD refund is just part of the estate to be distributed under the Will.
But if there is no Will and no loan agreement then we could all be surprised as to where the RAD refund ends up.
Consult Christine at Financial Care Services before you place your family member into residential aged care. Early advice about residential aged care fees and payment options could save the family from financial and interpersonal distress later.
When would the RAD refund be paid to the estate?
If the aged care resident dies then the two week period for refunding her RAD, or Bond, does not start until the executors show the Notice of Probate of her Will. Once the Notice of Probate is submitted, the aged care facility has fourteen days to calculate the amount to be refunded and make the payment to the estate of the deceased resident.
The aged care facility must credit the RAD, or Bond, account with interest for the period from the date of death until the date the Notice of Probate is shown to the facility manager. The interest accrues at a lower rate on RAD accounts and Bonds awaiting Probate.
What if the family are slow to arrange for Probate?
The aged care facility cannot refund a RAD or Bond, before receiving a Notice of Probate or a Court order regarding a resident who died intestate. Delays in submitting the Will for Probate and the time required for settling disputes all prolong the wait for the RAD, or Bond, refund.
Hence there could be a long wait before the RAD or Bond, is refunded if no Will could be found or the family could not get themselves organised to visit a solicitor.
Help with Wills and Powers of Attorney
Only a qualified solicitor could assist you draft your documents and then witness your Will and Enduring Power of Attorney.
Christine at Financial Care Services is not a lawyer. Therefore Christine cannot help you with preparing your Will. You need to consult a solicitor.
You could look for a solicitors’ office among your local shops. Most suburban law firms are happy to help people with Wills and Powers of Attorney.
Christine at Financial Care Services your independent adviser
Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants.
Our core values include working with clients in claiming DVA and Centrelink entitlements.
The team at Financial Care Services are here to answer your Age Pension questions and guide your understanding of aged care costs.
Help with Centrelink challenges is available from Christine Hopper at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.
Christine has neat handwriting just right for inserting your data into small printed spaces. She helps clients complete Centrelink forms.
Christine could help you with collating your supporting documents and then mailing your form to Centrelink.
Assistance with completing Age Pension Claims and the Commonwealth aged care means testing forms is available to clients of Financial Care Services.
Christine charges fees based on the work involved in advising you about pensions and aged care fee solutions.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle costs, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.
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Christine Hopper
Financial Care Services Pty Ltd
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact info@financialcareservices.com.au
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.
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