ACG Adviser QA Children lending to pay the RAD
Q: Can my children lend me the money to pay the RAD? A: The simple answer is yes, but it will impact your cost of care and may cause estate planning issues. Children often lend parents money for the Refundable Accommodation Deposit (RAD) this may be because the parents have insufficient funds, there is an aversion to borrowing or because the Daily Accommodation Payment will cause pressure on the parents cash flow. While it is not an uncommon practice you should be aware of the impacts this loan will have on the cost of care. The RAD is included in the assessable assets for calculating the Means Tested Care Fee. There is no consideration given in the assessment to some (or all) of the money being a loan. The total value of the RAD will be included in the aged care assets test and the MTCF will increase as a result of the loan. Loaning money to pay a RAD can create estate planning issues as the RAD is generally refunded to the aged care resident or their estate. You should seek legal advice about documenting any loan agreement. Alternatively, children meeting the cashflow shortfall, paying a Daily Accommodation Payment