Consider keeping your home to pay for your frail care
Making arrangements to ensure that you will be able to afford frail care if and when you might need it, ranks right up there with regularly updating your will - it is not something most people relish, says Berry Everitt, CEO of the Chas Everitt International property group.
"But similarly, it is something worth doing to relieve your children or other family members of a lot of personal and financial anxiety."
Places in old age homes and retirement villages, and especially those with good frail care facilities, are scarce and waiting lists are usually long, he notes. "Full-time frail care can also cost up to around R25 000 a month or even more, which can be a serious problem for retirees who are living on a fixed income, or for the families that might need to subsidise those costs. However, if it is done properly, the family home you own can be used as an asset to help pay for frail care. We believe the best option is to pay off the home loan on the property as soon as possible and then, if it becomes necessary, to let it and use the monthly rental income to contribute to the cost of frail care. This situation can be made even more favourable if you own more than one property."
Writing in the latest issue of the
Property Signpost newsletter, Everitt says the biggest advantage of this type of arrangement is that the property will still form part of your estate, although landlord issues, such as who will accept the rental payments, channel the money to the frail care centre and see to maintenance of the property do need to be clarified with your family ahead of time.
"You should of course also consult your attorney and your accountant or financial planner to discuss matters such as ownership and inheritance, who needs to hold a power of attorney to make decisions should you fall ill, and how to take care of paperwork to reduce tax and legal liabilities - for your heirs as well as yourself."
- Issued by Chas Everitt International