If you own property, renting it out may be one way to afford care in retirement villages or old age homes.
Making arrangements to ensure you are able to afford frail care if and when you may need it ranks “right up there” with regularly updating wills, and is not something most people relish, says Berry Everitt, chief executive of the Chas Everitt International property group.
“But it is 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, especially those with good frail care facilities, are scarce and waiting lists are usually long, he notes.
“Full time frail care can cost up to around R25 000 a month or more, which can be a serious problem for retirees living on a fixed income, or for families that might need to subsidise those costs.”
However, if done properly, family homes can be used as assets 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 more favourable if you own more than one property.”
Everitt says the biggest advantage of this type of arrangement is that the property will still form part of one’s estate, although landlord issues – such as who will accept rental payments, channel the money to the frail care centre and see to maintenance of the property – must be clarified with the family ahead of time.
“You should also consult an attorney and an accountant or financial planner to discuss matters such as ownership and inheritance, who needs to hold 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 and yourself,” he advises.