Understanding Rooming Accommodation Deposits: Key Insights for Estate Planning and Administration
Today, we’re tackling a specific yet crucial topic: rooming accommodation deposits. This issue frequently arises for our clients, both in estate planning and estate administration contexts. Let's dive into what you need to know about rooming accommodation deposits and their implications for your estate.
What Are Rooming Accommodation Deposits?
When entering a private nursing home, you are typically required to pay a rooming accommodation deposit. The amount varies widely, ranging from $230,000 to nearly a million dollars, depending on the nursing home and the facilities offered. You can pay this deposit in full upfront or make a partial payment and cover the remaining amount through weekly payments, calculated using a special formula by the nursing home.
The deposit is held by the nursing home and guaranteed by the government, earning interest over time. Upon your passing, the deposit is released to your estate, either in full or as a portion, including any additional amounts paid during your stay.
Implications for Estate Planning
For clients in their later years, planning for potential high-care needs in the next five to ten years is essential. A critical part of this planning involves ensuring you have sufficient funds available to cover a rooming accommodation deposit. Here's what to consider:
Assessing Liquidity: Evaluate the size and liquidity of your estate. Ask yourself, "If I needed to enter a high-care facility tomorrow, would I have the necessary funds?"
Gifting Assets: Be cautious about giving significant assets, such as money or property, to your children before ensuring your own financial security. Doing so can impact your ability to cover future care costs and affect potential pension payments.
Financial Planning: Always discuss your plans with a financial advisor. They can provide detailed advice on managing your finances, navigating nursing home requirements, and understanding Services Australia payments.
Considerations for Estate Administration
Rooming accommodation deposits also play a vital role in estate administration. One key point is that these deposits are only released once probate has been granted. Here's what executors need to know:
Probate Requirement: Even if the rooming accommodation deposit is the sole asset left, probate is necessary to release these funds. Executors must apply to the Supreme Court for probate of the will or letters of administration if there is no will.
Release of Funds: After obtaining probate, provide the documents to the nursing home, which will then release the funds, either via check or directly into a solicitor's trust account, depending on the nursing home's policies.
Conclusion
Understanding rooming accommodation deposits is crucial for both estate planning and administration. Ensuring you have the necessary funds for potential high-care needs and navigating the probate process for deposit release are key aspects of effective estate management.
If you have any questions about rooming accommodation deposits, estate planning, or estate administration, don't hesitate to contact us for a free consultation through our website www.viccalaw.com.au or email me at lidia@viccalaw.com.au. We're here to help you navigate these complex issues and ensure your estate planning needs are met.