Category: Advice Library

A range of resources to assist advisers deliver great advice; SOA wording, checklists and department forms.  Up to date and easy to access resources for all our members.

Legal Checklist for Planners – NSW.pdf

When advising clients who are moving into aged care or who may look to do so in the future, there are various important legal issues of which you, the financial planner, need to be aware. Below is a list of “conversation starters” for your clients which will assist. If you have any questions or concerns about your client’s situation, please give us a call. Family loans? Your financial planning strategy for your client may involve borrowing money from their spouse or children to fund the RAD. Please remember it is crucial that any such family loan arrangements are properly documented, particularly from the perspective of (a) Centrelink; (b) avoiding estate issues or disputes; (c) transparency between family members; and (d) addressing any shortfall in the amount ultimately refunded. Wills Who is the executor? Ensure that your client has appointed an executor who is still alive and who has capacity (and will likely have capacity when the client passes away). Also, check that your client has appointed a substitute executor (i.e. somebody to act if the executor predeceases them or loses capacity). “I love you” Wills If your clients are a couple who give all their assets to each other in

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SOA Wording – KEEP AND RENT FORMER HOME

Strategy Overview There is a two year general exemption that applies to your former home after entering aged care whereby the home is exempt from the assets test when calculating Age Pension entitlements. The purpose of this rule is to enable people to move back into their former home if they are able to do so. Any rental income received is fully assessable. After two years, the property will be included as an assessable asset and your pension will be assessed on the basis of a non-homeowner which provides a higher asset threshold. When calculating the aged care means tested amount, the former home value will be assessed up to a capped value of $178,839.20 unless a ‘protected person’[1] resides in the home, in which case the value of the home is exempt. A protected person includes: Your spouse or de-facto partner A carer who has resided in the home for at least 2 years who is eligible to receive an income support payment A close relative who has resided in the home for at least 5 years who is eligible to receive an income support payment Rental income from the former home will be included in the aged care

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SOA Wording – INSURANCE BOND WITHIN TRUST

Strategy Overview Centrelink/DVA are responsible for determining your capacity to contribute towards the cost of your care through the Means Tested Care Fee. This assessment is carried out after you move in to residential aged care as a permanent resident. Financial assets held in a Trust or Company structure are assessed differently to those held in your own name and can be very different to the legal or tax treatment of a trust or company.  Centrelink assess trusts and companies against two tests: a source test and a control test. The source test determines where the asset or monies used to purchase assets in the trust originated. The control test determines who controls, or could reasonably expect to control, the trust. Based on the outcomes of these tests, the asset value will be attributed to an individual or to a group of people in percentage terms and any income earned by the trust is attributed according to the same percentages. As a financial planning strategy, the key benefit of using a trust is that the monies held within the trust are not subject to deeming, they are assessed on the taxable income earned. Because of the tax paid accumulation nature

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SOA Wording – Cost of Extra Services Additional Services

Cost of Aged Care – Extra Services/Additional Services  The formula of fees that apply to all residents moving in to Extra Services is:  Accommodation Payment + Basic Daily Fee + Means Tested Care Fee + Extra Service Fee   Accommodation payment   Residents are required to pay for their cost of accommodation via a lump sum referred to as a refundable accommodation deposit (RAD), a daily charge referred to as a daily accommodation payment (DAP) or a combination of both.   These payments are based upon the market price set by the facility. The DAP is calculated on any amount of unpaid RAD at the government set interest rate, as at 1 July 2022 interest rate is 5.00%.   A resident cannot be charged a refundable accommodation deposit (RAD) that would leave them with less than $52,500 in assets. If the resident is a member of a couple, the combined assets of the couple are divided by half and $52,500 is subtracted from each share to determine the maximum accommodation payment.  The aged care facility can deduct the daily accommodation payment from the lump sum at your request.    The accommodation payment quoted by xx facility is $xx by RAD and $xx by

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SOA Wording – Home Care

Home care   Many people who need care are not aware that a variety of services are available for those who prefer to stay at home.    Home Care Packages provide Government subsidised services to assist people to remain in their home for as long as possible.   Services include:Personal care – such as help with showering or bathing, dressing, mobility, meal preparation and eating Support services – such as help with washing and ironing, house cleaning, gardening, basic home maintenance, home modifications related to care needs such as handrails in the shower, and transport to assist with shopping, visiting the doctor or attending social activities Clinical care – such as nursing, and other health support including physiotherapy (exercise, mobility strength and balance) and podiatry (foot care). Other services may also be provided eg you may benefit from aids and equipment to assist with mobility, communication or personal safety  What types of packages are available?  There are four levels of Home Care Packages:   Home Care Level 1 – to support people with basic care needs   Home Care Level 2 – to support people with low level care needs   Home Care Level 3 – to support people with intermediate care needs   Home Care Level

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