From 1 Nov 2025
Long awaited reforms to the national Aged Care system were due on 1 July, but have been pushed back and will now start on 1 November 2025.
Planning for aged care, and making sure you have the right person to help with your decision making, is a crucial part of estate planning – which is no longer ‘death planning’. Given one third of men and nearly half of all women who reach the age of 65 will, at some time, live with some form of aged care, this is relevant for a large number of Australians.
The new reforms include a lot more funding for home support and home care, but also restructure how residential aged care is assessed and paid for.
The cost of subsidised aged care is made up of a number of components, including:
- what a resident has to pay for care
- what a resident has to pay for accommodation
- what the government will contribute to basic care and means-tested care, and
- what the government will subsidise towards the accommodation cost.
For those already in aged care, their situation will be grandfathered in, and not forced to change unless they want to change and they are no worse off.
The Refundable Accommodation Deposit (RAD) that is assessed is often what is feared:
- The maximum that can be asked for (without an agreement to pay more) is increasing from $550,000 to $750,000
- Whilst you used to get all this back, when you exited the facility or died, now the aged care provider can keep 2% each year for the first 5 years (keeping a total of up to 10%) and has to refund the rest
- The RAD is always deemed to be paid by the resident and returned to the resident, so if someone else pays the RAD on behalf of the resident, then there should be a loan agreement in place, and
- After death, the RAD will not be refunded to the estate without a grant of probate.
For family members or those with power of attorney assisting people entering into aged care, there is a new Supporter role which can be registered with My Aged Care. An enduring power of attorney will still be required where the aged person loses capacity, as the Supporter role cannot continue to make decisions after the aged person loses capacity.
But aged care also makes the role of someone with a power of attorney more complex, particularly when deciding how to pay for aged care, and balancing the wishes of the person and the potential sale of their assets. Ademption can occur under a Will, when an attorney sells as asset, and it is no longer available to fill a gift after the aged person has died. The proceeds of the sale of property can be traced, the law of trusts and equity triggered, and it could leave an attorney open to liability.
These changes are making estate planning, and aged care financial planning, more complex, and will often need to be revisited before and during residential aged care. SPG Lawyers has an experienced team of estate planning and asset protection professionals to help you with this process.
Contact Jacqueline Brauman at SPG Lawyers for further information.
