Funding Your Relative's Aged Care? Understanding RADs

It is becoming more and more common for relatives to contribute funds towards the payment of nursing home Refundable Accommodation Deposits or RAD and other aged care fees. These payments are costly and an elderly person entering care might not be able to afford their preferred accommodation on their own. Especially if they don’t have liquid assets.

What is a RAD?

A RAD is a lump-sum payment for a room in an aged care facility and is the price for residents who are not eligible for Australian Government assistance. Each aged care provider sets their price for different rooms. Typically, RADs range from $350,000 – $1,000,000, however, they can be much higher. The resident receives a full refund of the RAD upon leaving the aged care facility. If the resident passes away, their estate recieves the RAD refund.

What should you consider?

If you are considering lending money towards part or the whole of your relative’s nursing home RAD, you must consider and obtain legal advice on how those funds will be returned to you when your relative passes away.

In an ideal scenario, an irrevocable direction is provided to the nursing home requiring that the RAD is repaid to you directly when your relative passes away and not their estate.

If the estate is to recieve the money, it’s critical to have a loan agreement with you relative in place. Therefore ensuring that a dispute does not arise between you and the executor or beneficiaries of the estate who might argue that the loan was a gift.  Or might claim a set off against the money you lent.

How can we help?

Antunes Lawyers can assist with:

1. Reviewing and providing advice on residential aged care agreements.
2. Advising on, and preparation of, a loan agreement between the lender of the funds and the person going into aged care.
3. Preparing an irrevocable direction to the residential aged care facility directing them to pay the RAD to the lender upon the relative’s death.
4. Providing social security, aged care, tax, and estate planning law advice.

While helping to fund the aged care fees of your relative might seem straightforward, it is important that you obtain legal advice so that critical issues are not overlooked.