SMSF Strategy – After 1 July 2014 Aged Care Reform

Do you have the Correct Aged Care Strategy?

With the new aged care reforms that have now come into effect since 1 July 2014, and have now set in practise, these changes will have “significant” implications for practitioners with SMSF trustee clients.

Advisers should make their trustee clients aware that they are going to have to contribute more to the cost of aged care “It is going to be even more important that [trustees’] affairs are in order, to make sure they can afford it and they can structure it properly, and that the fund can actually still function,” she said.

“These reforms now see retirees paying more for their admission to, and ongoing care in, aged care facilities. The bottom line is that the cost of aged care will increase, particularly for part-pensioners and self-funded retirees.”

Once a person reaches age pension age, the value of their superannuation counts as an asset for both aged care and age pension purposes, which means that a lot of people will now cross thethresholdfor Aged care pension leaving only benefits like seniors card etc.

A resident’s co-contribution will be assessed based both on assets and income rather than the under the current system of income only.

Accommodation payments are now structured slightly differently, with asset and income levels determining how much a resident needs to additionally contribute towards their daily care payments.

There are a number of considerations SMSF practitioners need to pass onto their clients before the new regime commences.

A Very Important Implication :

Trustees need to think about is if they lose capacity – that is a very important one.

“What have trustees got in place, who can step in on their behalf, who can’t, have they even considered

[incapacity] in the first place?”

Structuring the right investment strategy that reflects a trustee’s age is also essential.

“Make sure that the investment strategy of the fund is in line with doing things like selling down assets to pay for aged care and the ability to liquidate quickly to pay for lump sums.”

We work with various experts including SMSF specialist Accountants and Planners, and will help you with the right debt structure in your SMSF. Call me today for an obligation free consultation (02) 8096 7388 or visit http://www.fianceandmortgage.com.au.