A retirement village is often a daunting prospect as we all want our parents and loved ones to live forever, and for them to be able to stay in their family home until they pass away.
While this does happen in many cases, unfortunately, the reality is that at some point we may have parents or loved ones that are no longer able to stay living in their home one their own due to disability, illness, changing needs of their carer or family or even bereavement after losing a loved one and a retirement village may be the answer.
Whatever the reason, if a person is no longer able to safely manage on their own a decision will need to be made as to their future care and it is often a highly charged, stressful and emotional time for the aged person as well as the family members and carers. It is vitally important that professional advice is obtained from our experienced legal advisors, as well as your financial advisors, prior to making any final decisions or entering into any agreements with retirement villages, aged care facilities or nursing home providers. This is to ensure that all parties understand what is involved with each option, and are able to make informed decisions with all of the information at hand.
While there are a myriad of options available, including home care and assistance which can be offered in the persons home, we will focus on the two main options that are available when it appears that a person requires more care or security than at-home services can provide.
Essentially, these are either a retirement village or an aged care/nursing home facility. The main difference between the two is that retirement villages are typically set up as shared-lifestyle complexes where residents who have a high level of independence and require minimal assistance can enjoy an active and healthy lifestyle, whilst being in a safe and secure location. They will be living amongst others who are of a similar age and with similar interests and are generally offered amenities such as recreation, swimming, exercise facilities together with having their landscaping, gardening and maintenance needs taken care of.
An aged care or nursing home facility on the other hand is more suitable for those who require a significantly higher level of assistance, or who are not able to live independently, with round-the clock emergency care on hand, as well as the provision of daily services such as personal maintenance (showering, toileting) and feeding assistance for those who are incapable of these tasks.
Of course there are retirement villages that offer additional support and care to residents who require a higher level of care, however these services can be quite costly and may not be suitable in all circumstances.
There are obviously costs associated with each option, and there are qualities, benefits and negatives associated with each so it is important to make the right decision for your loved one and your family at the outset to minimise the expense, angst and emotion that can occur if the wrong decision is made.
At Affinity Lawyers, we want to make sure that our clients are aware of all of the possible risks and costs associated with either pathway, and to ensure that the option chosen is the best for you and your family in the circumstances.
While we cannot cover all eventualities and risks in this brief article, we wanted to highlight some of the main facts that you or your family may not have been aware of when it comes to retirement villages or nursing homes.
We will be providing you with this information in two parts. This article will focus on Retirement villages, and next month we will go into aged care facilities / nursing homes so keep an eye out for The Vibe next month to read more.
Retirement villages cater to the needs, services and lifestyle choices of people who are, generally, 55 years of age or older. Entry options generally include a combination of purchasing a freehold interest in a unit/villa situated in a retirement village, entering into a leasehold/license agreement for an extended (e.g. 99 years) period on a unit/villa in the retirement village, the payment of an ingoing contribution amount (or interest-free loan)
It is important to be aware that the purchase price, leasehold fee or ingoing contribution amount is not the only cost or expense associated with the transaction. Retirement villages provide residents with a lifestyle and facilities that their income may not support, sometimes on the basis that some of the cost of that lifestyle is deferred until the resident exits the retirement village and their unit is re-sold.
When the unit is re-sold, a share of the sale price usually goes to the Scheme Operator in the form of their capital gain share, exit fees and other exit charges. The amount of the Scheme Operator’s capital gain share and the exit fees and charges can vary significantly from retirement village to retirement village and are not regulated by legislation.
There are also a myriad of other charges that you could be required to pay including legal fees, lease registration fees (if applicable), general services charges, personal service charges, maintenance reserve fund contributions, capital replacement fund contributions and so on.
These additional costs could quickly add up to thousands of dollars per month on top of the purchase price.
You should also be careful not to disregard the exit fees/deductions on the basis that you intend to remain in the village until you pass away. Many residents end up leaving retirement villages earlier than they expected, either for family reasons or to move into an Aged Care Facility. At that point, the loss of capital via the exit deductions can impact on their ability to fund an alternative residence of the same standard, or an Aged Care Facility of the standard they desire.
You should consider this scenario in assessing the exit charges for a retirement village.
It is also important to realise that under the legislation, the Scheme Operator can require you to leave the Village (and incur the exit charges) if you are assessed as needing to move into an aged care facility.
There are many other clauses which can be included in retirement village contracts that require specific legal advice so you can understand their implications. It is a costly mistake to make if you enter into a contract unaware of the potential risks and future expenses related to the purchase.
While there are laws in place which provide that operators must provide disclosure statements which detail the fees payable and contractual terms, our experienced lawyers can peruse the proposed documents and explain all of the terms, conditions and charges to you in a concise and easy to understand manner to ensure you are fully informed.
As you can see, considering buying into a retirement village is a serious investment decision and one that often needs to be made quickly or during a time of emotional distress.
Our lawyers at Affinity Lawyers in Runaway Bay are here to help guide you and help you make an informed choice on the best pathway for your individual circumstances.
Feel free to contact our office today on 5563 8970 to arrange a consultation with one of our lawyers.