Yesterday Greg, Rachel and I met with a financial adviser to go over mum and dad's financial position in detail.

This exercise involved identifying assets and income which the government deems relevant to calculating both the up-front costs and on-going costs of their care. We were able to do rough calculations around the table, and what we concluded is based on the following goals:
  1. getting mum into care as a concessionary patient, which means she will not have to pay a bond
  2. getting dad into care without having the house counted as an asset
  3. minimising the on-going daily care charges for the two of them.
We can achieve 1 by reducing their assets by $65,000 - so we are doing this right now, as mum is already in care and we therefore have a deadline. We are making the maximum permitted amount of gifts ($10,000) to the four children. We are going to prepay mum and dad's cremations (about $15,000) and we are finally going to get some necessary repairs done to the house (about $40,000). To pay for this we have to sell the few shares they own, cash in a matured life insurance policy and some bonds, and dig into their bank accounts.

We will keep the house and rent it to tenants. For some reason, if we do not pay the full bond of $250,000 for dad, and pay interest on an outstanding part of it, the house is not considered an asset, and this position can be extended indefinitely. The rent is not considered income either. This seems too good to be true.

The result of all this is that while mum and dad are in care, if we are successful in keeping the house tenanted, they will have a net income of about $20,000 per annum, after paying the costs of their care. This seems very comfortable, especially as it can continue indefinitely.