How one family funded their mother’s aged care — without a fire-sale or a fortune in fees.

Aged care is the financial decision families are least prepared for and have the least time to make. Unlike a business sale or a succession plan, it rarely comes with notice. It arrives in the middle of a health crisis, while the family is exhausted and grieving the independence of someone they love — and it asks them to make six-figure decisions in a hurry. That pressure is exactly when the most expensive mistakes get made.

Our clients were a couple in their late fifties, living and working near Colac, with their own pre-retirement planning already underway with us. When the wife's mother — a widow of 84, living alone in her own home in a nearby regional town — had a fall and was assessed as needing permanent residential care, that quiet plan was suddenly overtaken by an urgent one. They needed to find a good home, fund the accommodation, and untangle their mother's finances, all while the clock was running. And they had walked straight into a system that had been rewritten only months earlier.

The brief: care first, panic never

When we sat down with the couple — and, where she was able, with her mother — three priorities emerged from the noise. First, get Mum into a good home, and do it without panic-selling assets at the worst possible moment. Second, keep her ongoing fees fair and predictable, and protect what was left of her Age Pension. And third, preserve as much of the estate as possible — their mother had always said she wanted to leave something to her three children, and the family wanted to honour that without compromising her care.

The first thing we did was take the time pressure out of the decision. A short stint of respite care gave the family breathing room to compare homes, get a proper means assessment done, and make the big financial calls calmly rather than signing the first agreement put in front of them. That single step — slowing down — is often worth more than any clever structure that follows it.

"Nobody plans aged care on a good day. The value isn't in moving fast — it's in making sure the decisions made under pressure are still the right ones a year later."

The timing mattered for another reason. Because their mother was entering permanent care after 1 November 2025, she fell under the new fee arrangements introduced with the Aged Care Act — a basic daily fee, a means-tested hotelling contribution, and a non-clinical care contribution, rather than the older single means-tested care fee. Understanding which rules applied to her was the difference between a fee estimate that was roughly right and one that was genuinely accurate.

Getting the means assessment right — before signing anything

The single most common mistake we see in aged care is families signing an accommodation agreement before they understand what the ongoing fees will actually be. The fees are driven by a formal means assessment of the resident's income and assets, carried out by Services Australia. Until that assessment is done, every number is a guess.

So we made sure the calculation of your cost of care form was completed and lodged early, and we mapped out exactly how each component would apply. Everyone in residential care pays the basic daily fee — set at 85% of the single Age Pension, roughly $24,000 a year — regardless of means. On top of that, because their mother had assets above the thresholds, she would contribute toward the hotelling and non-clinical care costs. Crucially, those care contributions are capped: the non-clinical care contribution has both a four-year limit and a lifetime cap of $135,318.69, after which it stops entirely. Knowing the ceiling existed changed how the family thought about the whole commitment.

With the assessment in hand, the fees stopped being a source of dread and became a known, finite line in a budget. That clarity is what made the next two decisions possible.

The family home: keep, rent, or sell?

The question that hangs over almost every aged care decision is what to do with the family home — and it's the one families most often get wrong by deciding emotionally before they understand the consequences. There are three real options: keep it empty, rent it out, or sell it. Each lands differently across two separate tests — the Centrelink Age Pension assessment and the aged care means assessment.

Because their mother was the sole occupant and there was no protected person — no spouse, carer, or dependent relative — living in the home, the picture was relatively clean. Kept or rented, the home would only count up to the aged care home-exemption cap of about $210,000 for the care means test, while for the Age Pension it would stay exempt for two years before being assessed in full. Renting would have generated income that was itself assessable, and left the family managing a tenancy from a distance during an already stressful period.

After weighing all three, the family chose to sell. The proceeds would do more work funding the accommodation properly than the house would do sitting empty or tenanted — and it removed the looming two-year deadline after which an unsold, unoccupied home would start eroding her pension anyway. Selling wasn't the automatic answer; it was the right answer for this situation, reached by actually comparing the alternatives rather than defaulting to one.

RAD or DAP — the decision that protected the estate

With the home sold, the accommodation could be funded the smart way. Residential aged care lets you pay the room price as a lump sum — a Refundable Accommodation Deposit (RAD) — or as a daily payment (a DAP), or any blend of the two. The choice looks technical. Its consequences are anything but.

The room price was $550,000. Paid as a DAP, that amount attracts a daily charge calculated at the Maximum Permissible Interest Rate — 7.61% for entries in the October–December 2025 quarter. On $550,000 that is roughly $41,855 every year — money paid to the provider and never seen again. Paid instead as a RAD, the full $550,000 is a lump sum that is refunded in full to her estate when she eventually leaves care. Same room, same care — but one path quietly bleeds the estate by more than $40,000 a year, and the other preserves the capital intact.

There was a second, less obvious benefit. A RAD is exempt from the Centrelink Age Pension assets test, even though it counts as an asset for the aged care means assessment. By moving $550,000 of otherwise-assessable money into the refundable deposit, the family actually restored part of their mother's Age Pension — a recurring fortnightly benefit that helps fund the unavoidable basic daily fee for the rest of her life.

Critically, they did not tip every dollar into the deposit. After paying the $550,000 RAD, roughly $410,000 was deliberately retained in their mother's name — an accessible buffer for the basic daily fee, the capped care contributions, comfort items, and contingencies. Aged care can run for many years or only a few; keeping liquidity in reserve meant the family never had to make a rushed financial move again.

What made this work

This worked because the family resisted the urge to act first and think later. The respite pathway, the early means assessment, the home decision, and the RAD-versus-DAP call were sequenced deliberately — each one informing the next — rather than rushed through in a single anxious afternoon. Reverse-engineering any of it after a hasty sale or a signed agreement would have left real money, and real peace of mind, on the table.

It also worked because the advice was built around the whole picture, not a single product. The aged care fees, the Age Pension, the family home, the estate, and the legal documents are not five separate problems — they're one problem with five moving parts, and they have to be solved together. The aged care provider set the room price; Services Australia ran the means assessment; the solicitor updated the documents; the financial advice tied the sequencing and the funding strategy together so the whole thing pulled in one direction.

Regional Prosperity works with families across South West Victoria — from Colac to Warrnambool, Geelong to Hamilton — on exactly these kinds of transitions. The figures in this case study reflect the fee arrangements in place from 1 November 2025 and the interest rate for the October–December 2025 quarter; aged care thresholds are indexed twice a year and every family's circumstances differ. But the principle holds: in aged care, the families who do best are the ones who get advice before they sign, not after.