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Later life can involve a lot of ‘events management’. One such creeping event, potentially and unfortunately, is that you may no longer be able to look after your increasingly frail spouse. Both for his care and your health, there can be no alternative but for him to become a resident of an aged care facility. Factors such as longevity and the earlier and inexorable decline of men are ensuring that this is becoming a far more common event for older women to confront. Of course, it can always happen the other way around.
As Centrelink calls it, you become ‘separated by illness’ – we prefer to call it – ‘separated by circumstance’. While there are all sorts of implications for you and him in this transition, two in particular are often not considered.
First, in relation to your Will:
- Many married couples make a Will giving everything to each other and then to the children. We call them ‘Mum and Dad’
- There is nothing particularly remarkable about that where there are conventional circumstances at play i.e., in a first marriage one of the spouses dies at home or even in hospital and everything goes to the surviving spouse.
- But, what if one of the spouses is in an aged care facility and then, contrary perhaps to expectations, the ‘healthier’ spouse who is still at home, dies first before the one in the facility. There are significant financial implications that many of us don’t realise.
- While you reside with your spouse in your home or if one of you have gone into an aged care facility, in assessing your age pension or age care fees, each of you would be attributed with one half of the combined assets and income of your marriage. In particular, the family home would remain exempt from the assets test for pension and aged care fee purposes.
- However, if one of you is in an aged care facility and the other one who is still at home dies, having given everything in their Will to the survivor in the aged care facility, suddenly that spouse is deemed to own all the assets and entitled to all the income. Consequence is their aged care fees may go up and, in some cases, substantially.
- Even worse, if it has not already been sold, after 2 years from the death of the spouse who was living at home, the home itself will become an assessable asset for the spouse in the facility.
- What if, however, you made a new Will after your spouse went into aged care and , effectively, disinherited him? You would need to change the way you own your assets such as your home from joint tenants to tenants in common and your Will might then be changed to say, for example, that, if you die before your spouse, your estate (including your share of the home) goes to your children and not the spouse in the aged care facility. That way, your spouse’s assets and income would not be suddenly boosted by your death with the adverse consequences to their aged care fees.
It’s a bit controversial and would not be for everyone but it is an idea that could be worth considering especially where there are substantial assets in the marriage and particularly where some of those assets are owned individually by the respective spouses or there is a blended family situation.
Second, in relation to your Enduring Power of Attorney (EPA):
- Like most people, you may have appointed your spouse as your EPA.
- If, however, they are in an aged care facility and have lost their capacity to make their own decisions, they cannot perform their role as your EPA if that ever became necessary.
- Unfortunately, most spouses only appoint each other as their EPA which means that, if one of them does lose their capacity, they cannot be the other spouses EPA. The result is you are left without an EPA
- So, unless you have appointed alternative attorneys in your EPA, it will be crucial to do another EPA appointing, for example, some of your children.
Addressing these issues can be somewhat delicate, especially where the financial and legal aspects of your relationship seem to take precedence over your understandable emotional attachment to each other. However, trust us when we say that, from our experience, the trials and tribulations that can flow from not addressing these subjects can far outweigh any sense of betrayal you may feel in having to accept the pragmatic reality of your changed circumstances.
Love and devotion may have kept you together ‘in sickness and in health’. However, at the very least, the increasing probability of these scenarios should encourage you to do something – to obtain some good legal and financial advice about the later life clouds that may be scudding across your sky as you read this article.
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