Bill an existing client of Palladium Wealth Partners unexpectedly fell ill, and after a lengthy stay in hospital was assessed by ACAT (Aged Care Assessment Team) and deemed to be in need of permanent residential High Care.
Within a very short time we needed to liaise with Bill and Andrew to ensue Bill’s imminent move into an Aged Care residential facility was not only smooth but that his finances were structured in the best way possible to fund the Age Care costs and meet his ongoing needs and objectives.
Bill’s key financial objectives were to retain his family home if viable, have a tax effective outcome and if eligible, receive some Centrelink Age Pension.
Bill and Andrew spent some time researching and visiting various facilities and they eventually found one that ticked all the boxes – be it High Care with extra services. The accommodation bond was agreed to as a fixed amount of $450,000 and Bill and Andrew were initially advised by the facility that Bill would have to pay the accommodation bond to the residential facility in full as a lump sum amount.
Once they had chosen an appropriate facility, we were then able to help them. With our advice and guidance during the negotiations with the residential facility, we made Bill and Andrew aware that in fact they could pay the accommodation bond via periodic payments or a combination of periodic payments and a lump sum.
Our recommendation to Bill was to pay $300,000 as a lump sum, $150,000 as periodic payments, and also rent out his family home.
By advising Bill in such a manner, we achieved the following outcomes for him:
– The family home was retained and it will remain exempt indefinitely under the Income and Assets tests for Centrelink Age Pension purposes and the Income test for Aged Care purposes.
Without our advice this would not have been the case.
– Bill was eligible for a higher level of Aged Pension than he otherwise would have received without our advice – approximately $7,500 per annum better off.
– The recommendation positioned Bill in such a way that no income tested fee applied for his Aged Care costs upon entry into the residential facility and for the foreseeable future.
– Bill was able to retain a reasonable lump sum of money in the tax free allocated pension environment to generate an ongoing tax free income and retain flexibility to access capital in the future if required.
– The combination of rent from his property, the minimum required draw down from his allocated pension and Centrelink part Age Pension now provides sufficient income to cover the ongoing Aged Care costs and his spending needs.
By seeking advice from us at Palladium Wealth Partners, Bill and his son Andrew, were better able to understand all the options available to them and make a more informed decision as to choose the right strategies for peace of mind.