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Ask the Guru: Retirement villages and aged care facilities

Ask the Guru: Retirement villages and aged care facilities


Do you know the non-legal issues your client should consider when looking to move to a retirement village? What about the potential costs to the children if your client dies while in aged care? We sat down with Rachel Lane, Founder of Aged Care Gurus and co-author of Aged Care Who Cares? to hear about the potentially significant matters that need to be considered when advising elderly clients. 

Rachel provides advice, education and accreditation to financial advisers and lawyers in the area of aged care. She has spent years advising elderly clients on the financial ramifications of a move into care and assisted countless families with making this often life-altering decision. You can catch Rachel at our upcoming Acting for Ageing Clients: Advising on Retirement Living and Residential Aged Care workshop, 26 November 2018.

Can you tell us a bit about your background and your company, Aged Care Gurus?

I used to work as a financial adviser specialising in providing advice for people moving into retirement communities and aged care. I established Aged Care Gurus in 2011 because I could see that there was a growing need for specialist advice both with legal professionals and financial advisors who are advising people looking at the various ways they can access care.

Aged Care Gurus provides education and accreditation to financial advisers, accountants and lawyers in the area of aged care. We support them in providing advice to consumers in this area. 

What are the key issues lawyers need to be aware of when they are advising clients moving into retirement villages or aged care facilities?

It might sound quite simple but the first is to understand what the contract is covering. Often consumers come in and they think they're purchasing aged care and actually the contract relates to a retirement village. Or they think they're purchasing a unit in a retirement village and they're actually purchasing a house in a land-lease community. Probably the first part is to make sure what the consumer thinks they're buying and what’s in the contract align. 

The next big question is around accessing care, particularly in retirement villages and land-lease communities. It's important to understand what would happen if your client’s care needs change over time. Your client might be living completely independently at the moment, but what would happen if they have an operation and needed to recover from that? Or what if they needed some short term intensive care, or ongoing care? Could they access that care in that community? Would they need to sort it out themselves? Would somebody help them coordinate that? Sometimes this can be a trigger to say look you need to find somewhere else to live because we can't and won't allow you to access those kinds of services here. 

Are there any additional costs lawyers need to be aware of when advising their clients?

It's important to understand all of the different costs the client is liable for at each point in time and not just focus on the purchase price. A lot of clients will focus on the purchase price and ignore the other aspects. 

When it comes to costs I like to break everything into three domains, particularly when clients are comparing moving into a retirement village or an aged care facility. Really what you're comparing is apples and oranges – they're not the same thing. So firstly consider what is the cost for your client to purchase?

Then you need to look at ongoing costs – so what is it going to cost to live there and make sure your clients allow for their own personal expenses. Even if your client is living in residential aged care there are still out of pocket expenses – chocolates, haircuts, outings, medications, birthday presents for the grandkids, telephones things like that.

Then you've got to look at the outgoing costs. This is sometimes a cost that the client won't see but their children will. In retirement villages there can be deferred management fees or exit fees – generally a percentage of either the resale price or the original purchase price multiplied by a number of years. It's not uncommon to see exit fees of anywhere between 30% and 50% when the client leaves. Then there can be other requirements around needing to refurbish or reinstate the unit. Those costs can vary widely, typically where it's simply a reinstatement requirement it tends to be steam cleaning the carpet, putting on a new coat of paint and just freshening it up. That normally costs about $2000. When we're talking refurbishment you can be up for a very serious renovation where you're replacing hard furnishings, soft furnishings and we see clients with refurbishment costs of $50,000 or $60,000.

What will you be covering in the LIV's Acting for Ageing Clients: Advising on Retirement Living and Residential Aged Care workshop?

We're going to be talking about the key financial considerations that clients need to be aware of when they're making a decision about moving into a retirement village, land-lease community or an aged care facility. We are particularly going to look at what happens to the client personally – so what needs to be considered in relation to their pension entitlements and the different terms and conditions which relate to different types of contracts that the lawyer and the client really need to be aware of. We will be looking at things that can be onerous on the client and what happens when a client passes away – how do different contracts then get treated. In some cases there are very quick payouts. In other cases you can be waiting for that accommodation to be purchased by somebody else in order to release the equity that you've got in it. So we will look at all of those key elements of what people need to be considering when they're advising clients moving into a retirement village or aged care.


To hear more from Rachel and learn about the wide range of accommodation and care options available to senior Australians, register for the LIV's Acting for Ageing Clients: Advising on Retirement Living and Residential Aged Care workshop, 26 November 2018.

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