As a son or daughter, you may be faced with handling the financial affairs of those you love as they grow old. While your parents have prepared for their retirement, there is every chance that they, like many others, have significantly underestimated the differences between retirement and the aged care stage of life. Differences that include their physical and cognitive decline, and of course, the cost of funding an increasingly high level of day to day living and nursing care.
Our advice in this area is two-fold: Firstly, we can provide aged care financial solutions for your parents who may be under-prepared; and secondly, we can assist you to prepare for your own aged care needs so that your children won’t be faced with the same dilemma. Read on to find out more…
If your ageing parents rely on you for emotional and financial support, it may fall to you to ensure that they have access to the finances required as their needs increase with age. With one third of men and half of all women aged 65 and over expected to move into permanent residential care [1], it is imperative that your family members are prepared for the associated expenses. ADX Wealth is well positioned to offer practical strategies for financial planning for aged care – for your parents now, and also for you in future.
First things first…
Help your parents or the elderly folk in your life with the paperwork. While your ageing relatives still have the capacity for reason and decision making, help them to update their Wills, Health Care Directives and importantly, Enduring Powers of Attorney. The latter will allow you to make health, well-being and financial decisions on their behalf should they become no longer able to do so.
The options…
Consider the alternatives available for funding their aged care expenses. Even if your parents are relatively healthy, costs are likely to arise and continue to increase as they age. Expenses will include pharmaceutical prescriptions, home modifications to cater for reduced mobility, gardeners, transport costs (once they stop driving) and expensive items such as glasses and hearing aids. Further considerable funds may well be required if your parents are among the growing number of Australians expected to live in an aged care facility.
Failure to plan for the potential and significant costs of aged care could not only consume a parent’s retirement savings, but in some instances could erode their estate plans or force the sale of the family home. This is particularly distressing for ageing couples which could effectively leave one parent displaced in order to pay for permanent nursing care for the other. In most cases, this scenario can be avoided by adequate planning as there are a range of funding options that can be tailored to suit individual circumstances.
The support you need…
At ADX Wealth, we can assist you when making complex financial decisions with your parents or on their behalf. We are experienced in helping our clients navigate what can be the equally complex and emotional duties of intergenerational care. We understand the sensitivity of these situations and compassionately support you and your parents by:
Coordinating relevant specialists including legal, banking and medical professionals
Presenting a range of real-life aged-care scenarios
Explaining confusing jargon and answering questions
Arranging documentations including Powers of Attorney (in collaboration with a solicitor)
Unlocking cash flow and structuring taxation efficiencies in preparation for funding aged care
Advanced planning for aged care empowers you and your parents to retain control over how and where they wish to live in their latter years.
Next steps…
For more information about financial planning for the aged care for a family member or for yourself, please contact your ADX Accountants client manager, Annie Lam or William Liu on (02) 8115 9262, or Tony Bates of ADX Wealth by emailing tony@adx.com.au.
[1] http://www.aph.gov.au/binaries/senate/committee/fapa_ctte/aged_care/report/c02.pdf
*Tony Bates is a Financial Advisor for ADX Wealth and licensed under AFSL 500640. The information (including taxation) contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. ADX Wealth and ADX Accountants Pty Ltd strongly suggest that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.