A power of attorney is a legal document that allows another person, the attorney, to act on your behalf to make financial decisions for you.  For example, an attorney may sell real estate, buy & sell shares or use money in your bank account to pay your medical bills.

It is crucial to make a power of attorney before you need it because once you have lost mental capacity you cannot make a power of attorney because, for it to be effective, you must be able to fully understand what you are signing.

Just picture this…

Your spouse suffers a stroke and is hospitalised.  The medicos inform you that he is suffering from memory loss and the prognosis is not good.  Some weeks later his condition worsens; he loses mental capacity and is transferred into full time care.

You live on a farm outside of town which you are now forced to sell to enable you to purchase a small unit in town to be close to your spouse and to also meet ongoing medical bills.

You make an appointment with a solicitor to affect the sale of the farm.  The solicitor tells you that as you and your husband own the farm in joint names, both of you need to sign the necessary documents.  You explain your husband’s situation to the solicitor, to which they reply; “that’s ok, we can exercise his Power of Attorney, so you can sign on his behalf”.

Your heart suddenly skips a beat as you realise that you and your husband never got around to getting that power of attorney organised after being prompted by your financial adviser every time you’ve seen them over the last half a dozen or so years.

In the above scenario, it is too late for the husband to get a power of attorney as he has lost mental capacity.  The only way to sell the farm now is to make an application for the appointment of a Guardian through the Guardianship Tribunal.  This process can take several months as the tribunal gathers all evidence, makes enquiries and holds a hearing in which a decision to appoint a Guardian is made.

All of this stress and running around, in a traumatic time of your life, could have easily been avoided by having an Enduring Power of Attorney in place.

An Enduring Power of Attorney provides you with the knowledge that your affairs will be managed by someone that you have chosen and can trust to act in your best interests.  An Enduring Power of Attorney can commence immediately or on a pre-determined date in the future or alternatively, upon you losing mental capacity due to: dementia, Alzheimer’s, an accident or illness.

You should appoint someone you trust absolutely and your attorney must also:

• Be over 18 years of age
• Have mental capacity
• Not be bankrupt, and
• Not be your health care provider or a paid carer

You should also consider appointing more than one person in case the first attorney appointed is unable to act for some reason.

So, get that power of attorney in place so you can save yourself the stress.

This above advice is provided as general advice and should not be interpreted as personal advice. If you would like to discuss the suitability of a power of attorney for yourself or someone you know, or to discuss how to/who to set up a power of attorney, don’t hesitate to contact our friendly staff today for a free initial consultation.

My interest in the Antarctic began in 1958 after I met the son of my father-in-law’s motor mechanic whilst having my old bomb serviced. Ron had only returned home the day before from a 12 month stint as a land surveyor. He told me that he had a wonderful and enjoyable time working down there. He stated that he was only home for a short while before he had to return to complete the project he had been involved in.

In 1978, when I was umpiring football with the Yarra Valley Mountain District Football League, our umpire’s advisor brought a friend to training one very cold night. When he was introduced to us we were informed that he had just returned to Melbourne from working down in Antarctica. We were all interested in the work he’d been involved with and what it was like to live there.

The following week, instead of training, this chap spoke to us about his stay down on the cold continent and also commented on our training attire. He told us that when one went out into the cold the most important pieces of attire was good footwear and a beanie.

During May 2015, I saw an advertisement in the Herald Sun newspaper for a seminar about trips to the Antarctic to be held at the Rialto Hotel, Collins Street, Melbourne. The session I went to, there were only three attendees but I found it very interesting and came away completely hooked.

Finally, I got myself organised to go to Antarctica on the 12th of February 2017.

We departed Tullamarine Qantas Domestic Terminal at 8:15 am in a Qantas 747 aircraft with a full plane. On arrival at Antarctica, our first communication was with Casey Station at 1100 hours and the first sighting of the ice was at 1310 hours. Then we flew over the continent for the next 6 hours, before our return home, arriving at Tullamarine at 9:00 pm.

During the day, everybody was very cooperative because we were all there to see as much as we could and have a wonderful experience. It is not easy for everybody to see out of small windows.

With respect to sitting near a window, one could book a window seat, but when we reached the half way mark of our time there, you were required to swap seats with another passenger who had booked a window seat.

Each time I looked out of the plane window, the beautiful scenery appeared to be changing all the time. We flew at a height of 10,000 feet above the ground.

When one reads facts about this continent, it’s larger than Europe and twice as big as Australia. I found it to be a fascinating place, something that I have never seen or experienced before in my travels.

This story was supplied by a The Investment Collective client for 2017 Financial Planning Week. 

What are the aged care options?

• Help at home

Subsidy is available from the government for home care services.   Your adviser will be able to provide you with further information about these services (they are not the subject of this article).

• Care through an aged care facility

Residential aged care provides care on a permanent basis or for a short stay known as respite.  There are different levels of care available and range from a fairly independent lifestyle through to 24 hour nursing care.

What are the costs of entering an aged care facility?

You must first be assessed by an Aged Care Assessment Team (ACAT) to identify your eligibility to receive care and which services you will need.

The costs of entering and living in an aged care facility include:

• Accommodation Contribution (Refundable Accommodation Deposit – “RAD”)
• Daily Accommodation Payment (“DAP”)
• Basic Daily Fee
• Means Tested Care Fee

How much will I need to pay?

The facility will charge you an accommodation contribution, or if your income and assets are below the prevailing threshold, the government will pay your accommodation costs.

If you have been assessed as having the financial means to support your own aged care, the accommodation contribution may be paid by RAD or by DAP or a combination of the two.  Interest charges may apply for any outstanding accommodation payment and residents must be left with at least a minimum amount of assets.  As an example, if your accommodation payment is $300,000 you may pay this:

• in full as by RAD; or
• by DAP; or
• a combination, say $150,000 by RAD and the remainder by DAP.

Every aged care resident will pay the same basic daily fee.  This is a fixed fee, indexed semi-annually for inflation.

The Means Tested Care fee applies only to residents whose assets exceed the asset threshold at the time and it is also paid at the maximum rate if the resident does not complete an annual Assets and Income Review with the Department of Human Services.

How can I get help to make my financial decision?

Contact an adviser at The Investment Collective to assist you in making your decision about aged care so that you have the best financial outcome.  Information is also available on the internet at https://www.myagedcare.gov.au/

Please note the information provided in this article is general in nature only. It has been prepared without taking into account your individual objectives, financial situation or needs. Before acting on anything in this article you should speak with your financial adviser to discuss whether it is appropriate to you in regard to your objectives, financial situation and current aged care needs. An adviser at The Investment Collective to assist you in making your decision about aged care so that you have the best financial outcome. Some of the details in this article may fluctuate from state to state and it is best to speak to an adviser about your specific circumstances before considering any of this information.

The ABC program, Four Corners, recently ran an exposé regarding a major Retirement Village operator in Australia.  As background for those who have not seen the program, there was concern about the level of fees being charged to the residents of the Retirement Village in particular, when someone leaves the Village and sells their unit – often described as deferred management fees.

This is a good reminder of a very important concept to understand as there is a clear distinction between a Retirement Village and Residential Aged Care.

Retirement Village

• They are open to those over 55 years old, generally via a 99-year lease arrangement that can be on-sold under certain conditions.
• They are generally more of a “lifestyle” decision than a health care-based decision.
• You will often pay some type of weekly or monthly management fee for the maintenance of the facility as well as a provision of services they offer.
• Your contract with the Village will outline how, when and who you can sell your unit to when you exit the Village.  It’s not often you can use the local real estate agent as this is not a ‘normal’ property transaction.
• Your contract will also outline what fees the Retirement Village will charge you upon exit. We have seen contracts that take 50% of any capital gain on the property or perhaps 30% of the total sale price.
• The resident exiting the Retirement Village will often have to meet the refurbishment costs of the unit for the incoming resident.

Retirement Villages are not something you want to be in and out of quickly.  If it is reasonably foreseeable that you may need additional care in the near future, perhaps staying in your own home and accessing some home care may be a better option.

Residential Aged Care

• Is open to anyone of any age (typically the elderly though).  Importantly, you can only enter a facility if you have an assessment (known as an ACAT assessment) done that confirms you qualify to enter Residential Aged Care.
• You will either ‘buy’ or ‘rent’ your room and pay a daily fee for your care.  A large portion of your daily care fee is subsidised by the Government and how much you pay is determined by a formula, which takes into account your means to pay the fees.
• Depending on how you pay for your room, your deceased estate can receive 100% of what you paid for the room in the first place (this is very different to a Retirement Village).

There are now a number of ‘dual’ facilities on the market where they offer you a Retirement Village unit initially and as your level of care increases, you move into Residential Aged Care, all within the one facility.  On face value, this seems a good idea however, we find this can lead to a false sense of security as you will still be technically required to exit your Retirement Village agreement (incurring the deferred fees outlined above) before entering a Residential Aged Care agreement.

As the Four Corners program highlighted, this is an incredibly complicated area to navigate.  Retirement Villages are not all bad; they can be fantastic for the right person. It’s incredibly important you and those around you understand what you are purchasing because there’s more to it than just downsizing into a small unit.

If you or someone near to you is considering a move, we cannot stress enough the importance of getting professional legal and financial advice from people who know how the industry works, to ensure you and your family understand if this is the right decision.

Contact The Investment Collective today to set up an obligation free meeting to discuss the suitability of a retirement village or residential aged care with an adviser and which would be more suitable for you according to your personal circumstances and personal goals.

It has often been said that the difference between success and failure is having a plan in place.  As with many things in life, the earlier you get started on your plan, the more successful the future outcome will be.  This is particularly true with regards to building and protecting your wealth.  A vital aspect of long term financial planning regularly overlooked is the importance of obtaining adequate personal risk protection cover.

Adequate risk protection cover such as Death, Total & Permanent Disability, Trauma and Income Protection provides a foundation onto which you will build the structure for your accumulation of wealth into the future.

Now that the new financial year has ticked over again, it may be the time to ensure you have sufficient protection in place as a contingency plan for anything that may happen in the future.  A wealth protection strategy will reduce the risk of you and your family not achieving your financial goals.

Starting out in life, you may have very little in savings and debts to manage.  If a family comes along, you should also consider how you will provide for your family and clear your debts if the unexpected occurs, particularly if you rely on one income.

Taking out cover while you are young and healthy will pay off in the long run.  If you purchase cover earlier in life, you will have access to lower premiums and you are less likely to have your cover restricted due to health conditions which are more prevalent as we get older.

Relying on your default cover via your superannuation to provide comprehensive protection for your specific needs is an all too common trap which should be avoided.  You may have an automatic level of cover on joining your fund, and this will rarely provide the benefits required to pay off the average mortgage, and cover future expenses for your partner and/or kids if you die, or stop working because of an accident or illness.

A long term strategy to consider is obtaining cover under Level premiums, instead of the more popular and initially cheaper option of Stepped premiums.  Stepped premiums will increase annually based on the higher probability of you claiming as you get older.  Unfortunately, many people with stepped premium protection in their later years, have to reduce or consider cancelling their cover, due to premium increases at the time when they may need it most.

A Level premium will ‘future proof’ your wealth protection as the premium will increase annually based on CPI, rather than increasing age risk factors.  When you are older, you will be able to maintain your cover as the premium has been averaged over the life of the policy.  On face value, stepped premiums appear to be the cheaper option when you are young, but Level premiums provide the longer term security to hold your valuable cover into the future.

Remember, sometimes more is lost by inaction, rather than action.  Plan for the future today so you don’t regret your inaction tomorrow.

This advice is prepared as general advice only, not taking into account your personal objectives, financial situation or needs. Please consider the appropriateness of the advice in light of your objective, financial situation and needs before following the advice. If you would like to know more and/or to hear about whether the above advice would apply to you, please contact one of our insurance advisers today.