Estate planning and aged care costs
Aged care costs can absorb a meaningful portion of an estate. Estate planning that anticipates aged care produces better outcomes for the family.
Aged care can cost from $400,000 to over $1 million across the final years of life, depending on the level of care and accommodation. Estate planning that anticipates these costs (asset structuring, gifting strategies, EPA arrangements, and aged care payment options) preserves more of the estate for the family while ensuring the senior receives appropriate care.
Costs to expect
Refundable accommodation deposit (RAD) for residential aged care: typically $300,000 to $700,000+. Daily care fees: subsidised but with a means-tested component. Means-tested daily care fee: based on assets and income, capped annually. Health insurance, medications, transport. Often $80,000-$120,000 per year for residential aged care.
Asset structuring
Family home is partly exempt from aged care means testing for couples (the spouse remains in residence). Investment assets, super, and accessible cash all count fully. Strategic structuring well in advance can preserve assets.
Gifting rules
Centrelink gifting rules apply ($10,000 per year, $30,000 over 5 years). Gifts above the limits remain assessable for 5 years. This limits last-minute asset transfers – planning needs years of lead time.
EPA arrangements
An enduring power of attorney is essential for aged care. The attorney pays facility fees, manages investments, and handles property. Without an EPA, families face SACAT applications during a vulnerable period.
Coordinating with the will
The will can include provisions for aged care residue (e.g. specific bequests funded if assets remain after care costs). For larger estates, structuring care costs to come from specific assets can preserve other assets for specific beneficiaries.
Summary
Aged care costs can absorb a meaningful portion of an estate. Estate planning that anticipates aged care produces better outcomes for the family.
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Disclaimer: This article is general information only and does not constitute legal advice. Estate planning is deeply personal - every family's circumstances are different. For advice specific to your situation, please contact Rosewood Succession Solicitors.