Does Nan sell the house?

Yes this is the question we all face when Nan has reached the age & she admits that an aged care facility is really where she needs to be. 

If Nan is assessed by ACAT as ‘low care’ or high care with extra services’ then an accommodation bond will need to be paid.

Recall that the accommodation bond depends on the facility & is charged if Nan has assets over 41,500 currently. It can be a large say 350K on average but we recently attended a talk by the Minister who mentioned a bond of 2.1m.

If Nan moves to a hostel or nursing home the decision to sell or keep Nan’s home can affect how much age pension Nan receive as well as the daily care fees Nan will pay. Overall this impacts Nan’s total net income.

How can the bond be funded when it is sizable say 400k on average & Nan doesn’t have the funds.

Recall that a facility doesn’t have to take Nan as any agreement is mutual. You may find a facility to place Nan is not easy to find.

 Also recall that the house counts as an asset under aged care assessment  and hence the accommodation bond [or charge if high care]. [We will assume that Pop has passed on.]

 

1.       If Nan sells her home, the money Nan receives will be assessed depending on how it is used.

If Nan sells the house & has money left over after the accommodation bond is paid  then as Nan like most is on some part pension then her pension may be affected as she may be earning more than in the past.

If Nan as usually the case places the surplus funds  into cash at the bank then these will have deemed rates of return.  Nan’s pension income reduces if she earns more than 152p.f. or she has assets over 332K as a non home owner. This adds up if as on average Nan ticks on for 5 years.

 

How does Nan pay the accommodation bond?

The accommodation bond can be paid as: a lump sum or periodic payments¹ or a combination of the two.

A facility can deduct a retention amount on a monthly basis of up to a maximum of $3,876 p.a. for up to five years (depending upon the amount of the bond shown in the following table). The retention amount does not alter during the five-year period.

Bond amount	Maximum annual retention amount
Less than $20,040	$2,004 per annum
Between $38,760 and $20,040	The maximum is calculated by multiplying the bond by 10 per cent
$38,760 or above	$3,876 per annum

The Remaining bond must be refunded within 14 days if a resident passes away or leaves the accommodation.

If transferred to another care facility, the bond may be transferred and the resident should not have to pay an additional bond in a low care facility (such as a hostel) or an accommodation charge for a high care facility (such as a nursing home).

 ¹ If the periodic payment method is chosen, a facility can charge a maximum interest rate of 7.24 per cent effective from 1 January 2013 to 19 March 2013. The interest rate is fixed upon the date of entry into the aged care facility.

2.       In many cases the family or Nan want to keep the house & pass it onto the family. They forget that in many cases the family have their own home & mortgage & that selling the house after Nan passes on is what will happen.  As often said ‘where there is a will there is a relative’& any lump sum is appreciated for the mortgage or the school fees or hot air ballooning.

 If Nan keeps the house then Nan must meet 2 of these 3 parameters.

·         Not pay the bond in full & Nan must pay interest on the outstanding amount by periodic payments

·         Pay an accommodation charge which is if Nan is in High care.

·         Rent out the former home.

This option has Centrelink exemptions such as rent & asset test but will be assessable by ATO.

Lets also not forget that house maintenance is 1%to 2% of house value p.a. & net income returns are often bettered elsewhere.

For Nan & the family this is an emotional time & we must not forget that Nan is the client. Hence what is best for her must be the overriding consideration.

As we explained an accommodation bond  to Les, a not so retiring retired accountant he immediately concluded  ‘so the bond doesn’t count as an asset’. [For Centrelink purposes.]

Exactly Les.

This is one reason why a resident paid $2.1m for a bond last year.

 It is a reason why the government is bringing in rule changes from July 2014 under the banner

Living Longer. Living Better. It includes limiting the size of bonds & as often the case what is good for them is not good for you.

 As can be seen Nan has both Centrelink & aged care assessments & they are very different. We haven’t brought in the daily charges  & other charges that are charged daily as that is for next time.

It is only government with brigades of employees who could make this decision for Nan to sell so complicated. You can read all @ Department of health & Aging.

 

John McAuliffe

How to earn $ 163,000 in one week?

How to earn $ 163,000 in one week?

Yes, we cycled across to the tennis last week & that was what Serena earned for the Brisbane International tennis. Not a bad week’s income considering that she didn’t have to play the world Number 1 ‘Queen Victoria’ who forfeited the match due to pedicure misadventure.

Yes a good week’s ‘Gross’ income [it is a business & businesses have costs] & how did she get to that income & standard.

Let’s not forget the taxx she has to pay & as Peter reminded us this week

The two enemies of the people are criminals and
government, so let us tie the second down with the
chains of the Constitution so the second will not
become the legalized version of the first.
                             --  Thomas Jefferson  --

We also read of Gerard who has moved from France to Russia. He reckons he has paid 148M in taxx & now has decided to be unpatriotic. It appears Russia is less Socialist.

We probably have all seen her Dad Richard sitting in the stands[most recently away from Mum]. We have heard how her & Venus learnt to play in gangland LA with Richard doing what Dads & coaches do to motivate & encourage & assist their daughters & charges to progress in their sport or trade or vocation.

We recall Martina with her Mum, Steffi with her father & Maria with her father all achieving great incomes through guidance & hours of coaching.

Yes all the girls & all the players have coaches to help them move higher up the ratings & with that means higher incomes.

We saw a TV flash with Serena practicing simple repetitive back cross court shots with her current coach. There is continual work to maintain & improve.

The WTA also allow the girls to request their coaches for advice during play. We know that all helps as ‘in the trenches’ all you see is ‘the fog of war’. You need help & a view from afar.

As the girls health is so important then they have a major sponsor which you might note on the bill boards the maker of the Number 1 supplements on the planet. As Gerald, a radiologist, said to us 10 years ago “if everyone was on these then he would be out of a job’.

Then on Sunday we over heard a certain cricketer ‘having it easy’. We will bet & he likes to do so that he practiced for hours during his teens & playing days & teams these days have coaches for every facet. Why did Australia do well bowling last year again the English. P. Siddle with a hat trick. They had a coach Craig who has been there & done that.

We observe that currently many of the cricket test teams have South African coaches which makes sense when RSA is no 1.

The same with finances. We had friends over & he said that he couldn’t control his wife’s spending.  That is really simple, ‘give her a monthly budget & a limit on the credit card’ & its ‘sausages or steak’ depending on the time of the month. Ideally cut up the card.

That is what the USA needs to do when 47% are on government support & 16 trillion in debt. It is in fact the debt that is summarised by a recent email to us that may bankrupt the US although some Rep. Rep said this week we won’t default. Yeah right.

The minting of a trillion dollar coin & depositing with the Federal Reserve is one way suggested.

Are you serious? The USA could use Al Gore’s help & wealth. Maybe too many drones in the sky.

 However the USA is uncoachable & we only help those who are coachable & have control of their debts.

As we discussed with William on Wednesday ‘debt is like tattoos & weight, easy to get but hard to remove .

[ William had just returned from a cruise & he was appalled at the gross weight of passengers &  others with too many tatts].  Winners achieve through self discipline & there is ‘no free lunch’. Our contempories at the tennis weren’t obese & we suspect could generally play tennis to a standard.

Joe a builder, was here recently & his contemplating moving to self employment as with Mr. Cricket he has tired of being away from home & family. There are steps to make as he makes this move.  He should of course write a business plan as all buildings need a plan drawn up by a draughtsman or an architect.

All  buildings should have some Foundations & insurance & hence we used our free calculator to estimate the deductible premiums with Joe.

Our credit union headlined ‘Who paid out $3.9 billion in 2011 & it wasn’t the lotteries?’

Yep an average of $15.9 million was paid to 251 Australians every working day for life insurance claims.

 As Victoria found, missing ‘work’ through injury might mean a large drop in income [163K]& meals & mortgages & leases & costs still need to be paid.

Joe is also aware that he needs a business vehicle & using his own cash isn’t ideal as trucks depreciate & his own cash would be better off paying down his 250K mortgage. Will Joe have that debt paid off before he retires & unless he actions the above idea then it won’t happen.

We could bet on that given our observations over 28 years. Joe needs a financial coach or builder as he needs to have no debt & 1 million in the bank or his business to enjoy his grandchildren. We do have actionable ideas for Joe.

Joe has a family & needs much more cover than is the union fund provides & we have found their clauses to be interesting.

We loaned Elizabeth ‘Rich Dad Poor Dad’ to understand that homes are not assets as they don’t provide an income. We suggested to her not to sell her rental properties due to the high costs 20K Elizabeth has already paid & a similar amount if she was to sell. Rather pay down the debt so she has income from it when she retires in 16 years.  

We also remodeled her superannuation  at a lower cost with more options including direct shares.

‘Invest like a cockroach’ if your wealth is to survive.

We might observe that generally it is Dads & their expectations & advice that helped Serena & others to have  higher incomes & no debts. Mums usually suggest buy a house & settle down.

Where would that get the WTA girls?

 “correct us  if we are wrong”. Whoooops ‘tiger Mums”

If you wish then you are welcome to call on 3848 1088 or email or visit our websites to plan & financially progress over 2013. Unless things change then nothing changes.

Maybe check out this chart. Maybe we can save you 15% in taxx. Lets do.

How much will the Aussies, Atomic Bernard, Sam, John Millman & others win in Melbourne?

John McAuliffe