Volume 7 Edition 6 Financial Care Services Newsletter
Financial Care Services Newsletter by Christine Hopper
Independent aged care, lifestyle and financial advice for seniors
Volume 7 Edition 6 – 30 June 2017
Buying into a retirement lifestyle community village is not a property investment
Buying into a retirement lifestyle community village is not a property investment that you can later sell on the open market.
You buy the ‘lifestyle’ of living in a gated community where the gardens and buildings are maintained for your enjoyment. The staff of a retirement lifestyle community arrange for the services you need to be provided to you within your retirement lifestyle community.
When you sign up for an independent living unit within a retirement lifestyle community you are ‘buying’ the right to occupy a residential space and to enjoy the communal facilities and services. When a new resident eventually takes your place in that retirement lifestyle community you would expect to have some of your ingoing amount refunded. The ‘rules’ governing ‘ingoing amounts’, regular fees, the type and level of services provided together with the timing and amount of any ‘exit’ payment are all set out in the Resident Agreement.
The Resident Agreement defines the ‘rules’ of your new retirement lifestyle community. Therefore an understanding of those retirement lifestyle community ‘rules’ could affirm your choice of lifestyle living. Alternatively, grasping the full impact of the costs of lifestyle living could help you avoid buying a lifestyle that does not suit your financial objectives.
Yes, the Resident Agreement is a thick legal document. But such a significant purchase as your buying in to a retirement lifestyle community warrants a detailed legal agreement.
Independent financial advice before entering a retirement lifestyle community
Help is available. Christine at Financial Care Services assists clients with understanding the fees, charges and exit conditions in retirement lifestyle community Resident Agreements. Contact Christine now to start the retirement lifestyle community discussion before you commit to entering a retirement lifestyle community.
Your Power of Attorney and adult children are welcome to come to the consultation at Financial Care Services.
If they were at the consultation when the money aspects were explained and illustrated with dollar amounts, then later they could not say “Mum and Dad would never have signed up to this retirement lifestyle community if they had known what was involved.”
Lifetime Cap on means tested care fees
The July 2014 aged care charging system includes Annual and Lifetime Caps on means tested care fees.
Each resident is assessed for means tested care fees on entry and whenever their circumstances change. If you have more income than a full rate Age Pensioner could have and/or your assets exceed the notional value of a vacant former home then you would expect to be paying some means tested care for residential aged care.
Each new resident pays her assessed rate of means tested care fee until she reaches the Annual Cap then she pays no more means tested care fee until the end of her care year. On the anniversary of her entering permanent residential aged care she starts a new care year so her means tested care fee restarts. She might hit the Annual Cap again so that her means tested care fees stop part way through her second care year.
If an aged care resident had hit the Annual Cap on means tested care fee in each of her first two care years then in her third care year she could reach her Lifetime Cap. Once the Lifetime Cap has been reached she cannot be asked for any further means tested care fees.
The first aged care residents to enter after June 2014 could be approaching their Lifetime Caps on means tested care fees.
Remember that you must prove your identity at Centrelink to have the Annual and Lifetime Caps applied to your means tested care fees.
The system of fees and charges for residential aged care is complex. Aged care means tested care fees can amplify your cash flow challenges.
Help is available Christine at Financial Care Services advises client families about the costs of residential aged care and home care means tested fees.
The first step to the independent advice for aged care is to email Christine at for the Financial Care Services Aged Care Checklist to collate the data for independent financial advice before entering residential aged care. You will also receive the Financial Care Services Financial Services Guide that provides information about Financial Care Services.
Save those aged care invoices, you might be able to claim a medical expense rebate
The fees and charges for residential aged care could count as ‘medical expenses’ for tax purposes. Any Retention Amounts deducted during the year from an Accommodation Bond also count as a ‘medical expenses’. If you paid an Accommodation Bond for entry to permanent residential aged care before July 2014 then you could ask the aged care facility for a statement of Retention Amounts deducted in the 2016/7 financial year.
If you or any of your dependants, have paid substantial amounts of aged care costs you could consider claiming a ‘medical expense rebate’. But remember you need to have enough income including capital gains, to be liable for income tax before you could benefit from the rebate.
Therefore at tax return time, you could ask your accountant about a ‘medical expense rebate’. Your accountant will need to see your aged care fee invoices and Retention Amount statement.
Centrelink Gifting year ends soon
If you give away more than $10,000 in any financial year then Centrelink will count the excess part as a ‘financial asset’ for the next five years. Also if you gift more than $30,000 over any five year period then the excess part will count as a financial asset for the next five years.
The financial year ends on 30 June. If you were planning to make a substantial gift this financial year then you will need to be quick to have it processed by 30 June. But if you are waiting for the 2017/8 financial year to make your next gift then next week you could pay that gift.
Remember at Centrelink selling an item for less than its market value is treated as gifting. The discount between the market value and the price paid could be counted as a gift.
Couples only get one gifting allowance; you do not each have a $10,000 gifting allowance.
Consider the Centrelink implications before you gift that holiday house or a great amount of cash.
Owning the holiday house five years before you reach your Age Pension Age could severely impact the amount of Age Pension, if any, that you could receive. Your holiday house might be ‘basic’ but the land under it could be highly valued.
Financial Care Services offers two packages for seniors approaching retirement.
One option is the ‘$99 Special Age Pension Illustration Short Consultation’ providing personal factual financial information in the form of an Illustration of the amount of Centrelink Age Pension you could receive today provided that you satisfied the age and residency conditions for a Centrelink Age Pension.
The other option is a ‘Retirement Planning Consultation’ which includes consideration of your overall financial position and personal financial retirement planning. The ‘Retirement Planning Consultation’ includes an analysis of your financial situation and personal financial retirement planning advice.
Retirement Planning Consultations require more detailed personal and financial information to be provided by the client to allow for the potential implications of your health status, housing needs and any liabilities to be considered in addition to the structuring of your assets to generate “retirement income” including any Age Pension entitlements. Retirement Planning Consultations are charged at professional adviser hourly rate fees.
Financial Care Services your independent financial adviser
Financial Care Services is an independent financial advisory service specialising in retirees of modest means and aged care entrants. Our core values of working with clients in their lifetime financial planning supports claiming DVA and Centrelink entitlements.
Financial Care Services charges fees based on the work involved in advising you about pensions and aged care financial solutions and arranging your investments.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle or financial issues please contact Christine Hopper or call +61 3 9808 0338.
Financial Care Services Pty Ltd
Independent aged care, lifestyle and financial advice for seniors in Melbourne, Victoria, Australia
Australian Financial Services Licence Number
299570 (check this at www.search.asic.gov.au/fsr/flb.html)
Authorised Representative Number 252529 (check this at www.search.asic.gov.au/fsr/far.html)
Telephone – call +61 3 9808 0338
Email – contact firstname.lastname@example.org
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
Website – visit www.financialcareservices.com.au
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations.
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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