Author: Alice Mantel

Ageing Australians increase demand for aged care services

As Australians are living longer than ever before, they are likely to experience greater frailty and more complex care needs requiring more aged care services.

Following the Royal Commission into Aged Care Quality and Safety report in 2021, it advised there was a need to significantly improve the quality of both residential and home care, exacerbated by chronic workforce shortages leading to substandard care. In 2023 the Aged Care Taskforce (the Taskforce) was established to advise on funding arrangements, including:

  • a fair and equitable approach to assessing the means of older people;
  • participant contributions for home care;
  • reforms to arrangements for funding of hotel and accommodation costs in residential aged care, including the phasing out of Refundable Accommodation Deposits (RADs);
  • services for inclusion and exclusion in the new home aged care program;
  • funding and contribution approaches to support innovation in the delivery of care.

Issues affecting the aged care sector

The Taskforce identified the following issues affecting the aged care sector:

  • demographic change means demand for aged care services will continue to grow;
  • current and future generations of aged care participants have high expectations of what quality aged care looks like;
  • generally older people are wealthier than previous generations and the taxpayer base is declining as a proportion of the population.

Demographic changes
The size of the population aged 65 and over is growing faster than the working age population. Over the next 40 years, the number of people over 80 years of age is expected to triple to more than 3.5 million. These demographic shifts have two critical implications:
• the taxation burden for funding aged care services grows for a segment of the population that is becoming proportionally smaller;
• gaps in the aged care workforce increase, creating significant ongoing challenges to delivering quality care.

Additional funding is needed to meet future demand and deliver quality improvements, but structural issues mean the sector’s financial viability is poor.

Superannuation shortfall
Income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged care costs. Superannuation, combined with high asset wealth through the family home and other investments, mean more people have accumulated wealth and income streams when they need to access aged care services. As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.

It is important to note that, while the asset wealth of many older people has increased, there will be a group of people with less means. Even with the maturing superannuation system, over half of older people will continue to receive some Age Pension either at retirement or as they draw down on their superannuation. Past workforce participation rates also mean women are more likely to have less means in retirement, as are those who do not own their home.

Increase in demand for home care services
It is estimated that there will be almost 2 million older people using home care by 2042, compared with around 1 million currently. Consequently, the demand for home care has been rising sharply and is projected to continue growing well into the future. As a result, government spending on aged care as a proportion of gross domestic product (GDP) is projected to grow from 1.1% in 2021–22 to 2.5% in 2062–63.
More broadly, society is demanding higher quality aged care services for all, including participants supported by government. For example, research on public understanding and perception of co-contributions in aged care showed people are willing to pay more for home care services that are essential and increase quality of life and dignity.
Additional funding is needed to meet future demand and deliver quality improvements, but structural issues mean the sector’s financial viability is poor.

Aged care funding principles
Principle 1: The aged care system should support older people to live at home for as long as they wish and can do so safely.
Principle 2: Aged care funding should be equitable, easy to understand and sustainable.
Principle 3: Government is and will continue to be the major funder of aged care. Government funding should be focused on care costs as well as delivering services in thin markets. Personal co-contributions should be focused on accommodation and everyday living costs with a sufficient safety net.
Principle 4: The residential sector should have access to sufficient capital to develop and upgrade accommodation, including in rural and remote areas and First Nations communities.
Principle 5: Aged care funding should be sufficient to deliver person-centred, quality care by a skilled workforce.
Principle 6: Aged care funding should support innovation to improve aged care services and their relationship with the health and hospital systems.
Principle 7: There should be transparency and accountability for how aged care funding is received and spent while minimising regulatory burden.


Proposed changes

Home care funding
The new Support at Home Program will be implemented in 2 stages, replacing the current Home Care Packages Program from 1 July 2025 and then rolling in the Commonwealth Home Support Programme from no sooner than 1 July 2027.

Capital funding
Over the next decade to 2030, additional investment of approximately $5.5 billion would be required to refurbish and upgrade existing aged care rooms, increasing to $19 billion by 2050.7 Current funding arrangements will not deliver the required amount of capital funding.

Funding arrangements – reforming co-contributions
While the Taskforce supports government maintaining its central role in funding aged care, it does not support a specific increase to tax rates to fund future rises to aged care funding. There are substantial intergenerational equity issues in asking the working age population, which is becoming proportionally smaller to pay for these services. Moreover, superannuation has been designed to support people to grow their wealth and fund the costs associated with retirement including aged care.

There is a strong case to increase participant co‑contributions for those with the means to contribute, noting that there will always be a group of participants who need more government support.

Reforming co-contributions would also provide an opportunity to create a simpler and fairer system by addressing current inequities. The Taskforce suggests the Age Pension status of the participant, with some additional tiers for part-pensioners and non-pensioners, would be a fair and simple way to determine participant co-contributions for aged care services.

Phasing out Refundable Accommodation Deposits (RAD)
The Royal Commission (Commissioner Briggs) recommended phasing out of RADs over time and replacing them with income through a ‘rental model’, where everyone pays with non-refundable periodic payments, from July 2025.

The Royal Commission identified several issues with the RAD system that led to this recommendation:
• RADs and DAPs are not economically equivalent, which creates incentives for providers and older people to prefer one over the other.
• Use of RADs creates liquidity risks for providers, as the RAD must be refunded within 14 days of the resident leaving care. There is no guarantee the resident will be replaced by another RAD payer and, with falling occupancy rates, there is a risk they will not be replaced at all.
• The presence of RADs distorts access to finance towards providers better able to attract RADs.
• RADs are not a reliable capital financing mechanism for particular segments, such as providers in rural and remote areas.
Paying more towards accommodation will improve sustainability. This will attract increased investment into the sector to upgrade existing homes and build new homes with high quality, modern facilities.

Protections for low-income residents
Older people with limited means need to be protected. While the residential care proposals outlined above would improve the viability of the sector through improved co-contributions, they may make it more attractive for providers to seek out prospective non-supported residents in favour of government-supported residents.

For more details, see chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.health.gov.au/sites/default/files/2024-03/final-report-of-the-aged-care-taskforce_0.pdf

A fairer go for young people to reduce the generation gap

It’s a myth that young people’s spending habits and lifestyles are to blame for their stagnating wealth. This is not a problem caused by avocado brunches or too many lattes.

Today’s young Australians are in danger of being the first generation in memory to have lower living standards than their parents’ generation according to a 2019 report by the Grattan Institute., titled, Generation gap: ensuring a fair go for younger Australians .

According to the report, older Australians today spend more and have higher incomes and greater wealth than older Australians three decades ago.

But living standards have improved far less for younger Australians. The wealth of households headed by someone under 35 has barely moved since 2004.

Poorer young Australians have less wealth than their predecessors and are far less likely to own a home. In contrast, older households’ wealth has grown by more than 50 per cent over the same period because of the housing boom and growth in superannuation assets.

In fact, younger people are spending less on non-essential items such as alcohol, clothing, and personal care, and more on necessities such as housing, than three decades ago.

Economic pressures on the young have been exacerbated by recent wage stagnation and rising under-employment. Older households are better cushioned from low wage growth because they are more likely to have other sources of income.

If low wage growth and fewer working hours is the new normal in Australia, then we could have a generation emerge from young adulthood with lower incomes than the one before it at the same age. This has already happened in the US and the UK.

Young Australians will also bear the brunt of growing pressures on government budgets.

Because the population is ageing, governments will have to spend more on health, aged care, and pensions. But there will be fewer working-age people for every retired person to pay for it. The number of 15-64 year-old Australians for every person aged 65 or older fell from 7.4 in the mid-1970s to 4.4 in 2014-15 and is projected to fall further to 3.2 in 2054-55.

Governments have supercharged these demographic pressures by introducing generous tax concessions for older people. A subsequent Grattan report, Super savings: Practical policies for fairer superannuation and a stronger budget has suggested that tax breaks on superannuation are excessively generous and should be wound back to help fix the budget.

Super tax breaks cost the budget $45 billion a year – or about 2 per cent of GDP – and will soon exceed the cost of the age pension.

These tax breaks are not well targeted. Two-thirds of their value benefit the top 20 per cent of income earners, who are already saving enough for their retirement. Retirees with big superannuation accounts pay much less tax per dollar of super earnings than younger workers do on their wages.

The share of households over 65 paying tax has halved over the past two decades. And older households pay substantially less tax on the same income as younger households.

Working-age Australians are underwriting the living standards of older Australians to a much greater extent than the Baby Boomers did for their forebears, straining the ‘generational bargain’ to breaking point.

The report insists that policy changes are required. Policies to boost economic growth – such as tax reform, better education and smarter infrastructure spending – are wins for all, but especially for the young. Changes to planning rules to encourage higher-density living in established city suburbs would make housing more affordable. And a fair go for younger people means winding back age-based tax breaks for ‘comfortably off’ older Australians.

Just as policy changes have contributed to pressures on young people, they can help redress them.  The time for action is now: none of us wants the legacy of a generation left behind.

What is the cost of dying?

Like everything else, the cost of dying is increasing as much as the rising cost of living.  A study commissioned by Australian Seniors and CoreData in August 2023, The Cost of Death Report 2.0 found that estimated funeral costs have increased by more than 20% for burials and cremations since 2019. In 2023, the average burial costs $11,039, compared to $9,055 in 2019. Similarly, the average cremation now costs $8,045, compared to $6,334 in 2019.

The study revealed that we are paying up to $18,652 for a basic burial funeral, and up to $5,953 for a basic cremation funeral. This is due to the rising costs of funeral services – including embalming, viewing, transportation, and professional fees – along with the cost of coffins and burial plots to name a few.

A third of the responders who recently helped pay for a funeral experienced some form of financial hardship. Two-thirds of those who experienced financial hardship said that it took months to financially recover.

Saying goodbye to those we hold dear should be a time of love and unity. Regrettably, this is not always the case.  It’s no secret that funerals can exact a heavy financial toll, but they can also create tension between family and friends. Unfortunately, more than a third of responders encountered arguments with loved ones over funeral finances, adding weight to an already heavy situation.

Further, the study suggests that a trend is emerging where families are pressuring us to spend more on funerals than initially planned, a trend which has more than doubled since 2019.

Consequently, it seems our funeral preferences are changing. Many of us are now opting for simpler services (26%), being more cost-conscious (24%), and choosing cremations or cheaper alternatives to traditional burials (22%). Some of us are even getting creative and considering a DIY funeral (9%).

Tradition is taking a back seat as we focus less on mourning and more on celebrating life. In fact, most (83%) of us now prefer the celebratory approach. We want a funeral that reflects us – who we are and what makes us, us. An example of this are our changing music preferences, moving away from conventional funeral songs. Instead, iconic artists like Elvis Presley, Queen, Frank Sinatra, and Elton John emerged as the most common choices.

On the other hand, many of us are yet to discuss our wishes with loved ones. In fact, only 1 in 2 (53%) of us have made our families aware of our funeral preferences. For those of us who are yet to have this conversation, it’s important that we communicate our funeral wishes to our nearest and dearest to ensure we receive the farewell we desire.

Australian Seniors:  The Cost of Death 2.0 Report, November 2023, https://www.seniors.com.au/documents/australian-seniors-series-cost-of-death-report-2023-whitepaper.pdf

 

Against the trend – grey divorce is rising

The Australian Institute of Family Studies (AIFS) has released its research into the rate of Australian divorces. While the rate of divorces for all age groups has remained constant, if not, actually decreasing slightly, the rate of divorce for older couples (over 65 years) and long-term marriages (over 20 years) is steadily increasing.

Divorces

The crude divorce rate (divorces per 1,000 Australian residents) was 2.2 divorces per 1,000 residents in 2021, up from 1.9 in 2020. The total number of divorces granted in 2021 was 56,244, the highest number of divorces recorded since 1976. However, this high number (and therefore also the crude divorce rate) was affected by administrative changes that have enabled divorces to be finalised in a reduced time frame. For this reason, the Australian Bureau of Statistics (ABS) cautions about comparing the 2021 divorce statistics to those of earlier years.1

Since the 1990s the crude divorce rate has trended downward, reaching a low of 1.9 per 1,000 residents in 2016, 2019 and 2020. The higher 2021 figure disrupts the trend over recent years, although, as noted above, the break in series may be due to changes in administrative arrangements.

After very low rates in the first half of the twentieth century, the crude divorce rate rose in the 1960s and 1970s. It peaked at 4.6 per 1,000 resident population after the introduction of the Family Law Act 1975 (Cth), which came into operation in January 1976 and allowed no-fault divorce. As some long-term separations were formalised and some divorces that had been filed in the previous years were brought forward, this contributed to the steep rise in the number of divorces in 1976.

Between 1986 and 1996, age-specific divorce rates increased across all age groups for both men and women.

From 1996 to 2016, while the divorce rate overall declined, the trends in divorce rates differed between younger and older age groups: falling for men under 45 years and women under 40 years increasing for men aged 50 years and older and women aged 45 years and older.

Between 2016 and 2021, the age-specific divorce rate increased for all age groups of men and women but, as noted above, this may simply indicate that the administrative changes affected the processing of divorces across all age groups.

The trends in divorce discussed above apply only to married couples and do not capture the extent to which people in cohabiting relationships separate over time. Research indicates that cohabiting relationships are more likely than marriages to end in separation, particularly when cohabitating couples have not otherwise gone on to marry (Hewitt & Baxter, 2015; Qu, Weston, & de Vaus, 2009).

At what age are couples divorcing?

The median age of men and women rose between the early 1980s and recent years, which is largely attributed to trends in people marrying later as well as more divorces involving longer marriages (see the discussion on marriage duration below).

The upward trend in the median age of divorce has stalled since 2018. In 2021 the median age at divorce was 45.9 for males and 43.0 for females, similar to the median ages in 2018 and 2019 (45.9 for males and 43.1 for females for both the years).

Median age at divorce in 2021 – Overall, the median age at divorce has been rising since the 1980s; 43.0 years for females and 45.9 years for males.

Duration of marriage to divorce

The largest proportion of couples separating and then divorcing were married for nine years or less. In 2021, 56% of separations and 41% of divorces were couples in this category. This showed little change from 2020.

Couples who had been married for 20 or more years made up more than one-quarter of divorces in 2021. In the 1980s and 1990s these couples made up a smaller proportion, at around one in five divorces.

The median duration of marriage to divorce for divorcing couples over the last decade (2011–21) was between 12 and 12.2 years, and the median duration of marriage to final separation was 8.3 to 8.7 years. In other words, it took 3–4 years from separation for divorcing couples to finalise their divorce.

What about the children?

The proportion of divorces involving children under 18 years has fallen since the 1970s, from 68% in 1975 to 47% in 2014. It has remained at around this percentage in recent years, shifting slightly higher, to 48%, in 2021. The general declining trend is partly due to the rise in divorces of long-term marriages where children are already grown up. An overall decline in the fertility rate and a rise in childlessness may also contribute to the fall in the proportion of divorces involving children.

It is also important to note that divorce statistics do not include separations of cohabiting couples with or without children. Research suggests that cohabiting couples with children were more likely than married couples with children to separate (Qu & Weston, 2012).

Divorces of same-sex marriages

Same-sex marriages were included in the marriages data for the first time in 2018, following the Amendments to the Marriage Act 1961 that allowed same-sex couples to legally marry in Australia and came into effect on 9 December 2017. Divorces of same-sex couples were recorded for the first time in 2021.

There were 473 divorces granted for same-sex couples, representing 2.5% of all same-sex marriages registered between 2018 and 2021.

There were 306 divorces of female same-sex couples and 167 divorces of male same-sex couples between 2018 and 2021, representing 2.9% of female same-sex marriages and 2.3% of male same-sex marriages registered in that period.

To read the entire article, go to: https://aifs.gov.au/research/facts-and-figures/divorces-australia-2023.

References

Australian Bureau of Statistics (ABS). (various years). Divorces Australia (Catalogue No. 3307.0, 3307.0.55.001). Canberra: ABS.
Australian Bureau of Statistics. (various years). Marriages and Divorces Australia. Canberra: ABS.
Australian Bureau of Statistics. (1980). Social Indicators 1980 (Catalogue No. 4101.0). Canberra: ABS.
Hewitt, B., & Baxter, J. (2015). Relationship dissolution. In G. Heard & D. Arunachalam (Eds.), Family formation in 21st Century Australia. Dordrecht: Springer.
Qu, L., & Weston, R. (2012). Parental social marital status and children’s wellbeing. (Occasional Paper No. 46). Canberra: Department of Social Services.
Qu, L., Weston, R., & de Vaus, D. (2009). Cohabitation and beyond: The contribution of each partner’s relationship satisfaction and fertility aspirations to pathways of cohabiting couples. Journal of Comparative Family Studies, 40(4), 585–601.
1 ABS (2021) stated: ‘The Federal Circuit and Family Court of Australia have advised that the high number of divorces finalised in 2021 is in part related to administrative changes to increase finalisations and reduce time frames. These changes enabled the finalisation of more applications for divorce than previous years and allowed the court to reduce backlogs by finalising more divorce applications in the year than were received. This constitutes a break in time series and any comparison with earlier years should be made with caution.’

Are you prepared for ageing?

A recent survey says there are three resources you need to better navigate getting older.

  1. Housing security, income security and quality care are essential enablers for later life planning.

    2. Good information. Having access to quality information about ageing preparedness is essential.  It assists people to know what to expect from their ageing bodies, what lifestyle changes they may need to consider as they age and negotiating social support systems.

    3. Emotional resilience. Developing a positive attitude to ageing better equips people from the effects of future health shocks, finance shocks, dependency, or decline.  

    In our youth-oriented culture, ageing is associated with inevitable decline and burdensome dependency. These powerful negative stereotypes are internalised throughout our lives, which results in many of us being unwilling to think about being an older person or planning for such an undesirable future.

    The 2022 National Seniors Social Survey asked its members and associated network members over 50 years about their ageing-related preparedness.   About 68 percent of the 3,412 respondents felt they were prepared to some extent to deal with the ageing process.  Most of these respondents reported there were some positive aspects to ageing, but people experiencing poor health were 30 percent less likely to feel prepared.   

    • People who felt there are positive aspects to ageing were 3.4 times (or 340%) more likely to feel prepared.
    • People with concerns about ageing were 60% more likely to feel unprepared or neutral (neither prepared nor unprepared).
    • Those who expected their quality of life to get worse over the next 5-10 years were 20% less likely to feel prepared.

    Both individual characteristics and societal supports were relevant to how people prepared for getting older.  People who had experienced health changes in family members were far more likely to be interested and better informed about how ageing might affect them personally.  While poverty and disadvantage were more likely to impact people’s access to resources such as healthy food or appropriate medical care that assisted better ageing. 

    Domains of preparedness were:

    • Preparing for changes in health and bodily abilities:  respondents varied between acceptance of physical decline and being able to manage that decline, and fear of decline. 

    • Preparing accommodation:  most respondents acknowledged the possible actions needed to remain at home with age, while fear of residential aged care underpinned the second most prevalent views.  Renters were most concerned about their future.

    • Preparing finances:  while some respondents linked their feeling of financial security to having worked hard during their life, the second most prevalent view expressed concern about money, with some consequently being unable to prepare adequately for ageing.

    Those feeling prepared for ageing frequently had very positive life-scripts reflecting acceptance, empowerment and capacity to manage ageing-related health changes. Not surprisingly, unpreparedness was represented by life-scripts focused on sudden or unexpected health declines or lack of resources and support. 

    To access the detailed survey, visit National Seniors, https://nationalseniors.com.au/uploads/NSA-Ageing-Preparation-report-FINAL.pdf

    Can you predict a happy retirement?

    Have you ever wondered whether you will be happier in retirement than when you are still working?

    A long-term research study has considered seven aspects of personal life which may determine whether you will feel satisfied in your retirement years.  The seven aspects of personal life are:  standard of living, health, achieving in life, personal relationships, safety, community connectedness, and future security. 

    Known as the Personal Wellbeing Index (PWI), the PWI determines the average level of individual satisfaction compared to the National Wellbeing Index (NWI). 

    The research was conducted to create the Australian Unity Wellbeing Index (AUWI) as a barometer of Australians’ subjective wellbeing (SWB). Thirty-five cross-sectional surveys of 50,060 Australians were conducted over a period of 17 years, from March 2002 to April 2018. The same core index questions, forming the PWI and NWI were asked within each survey.

    Subjective Wellbeing (SWB) in ageing and retirement is a topic of growing relevance, with more than 1 in 7 Australians aged 65 years or above, and more people in this age group choosing to remain in the workforce for longer periods.

    As individuals age, it is apparent that SWB becomes increasingly influential on health and longevity.  Identifying factors that predict wellbeing in retirement may offer important insights that inform health policy advances to promote wellbeing in older Australians.

    Key findings

    Differences in wellbeing between retirees and non-retirees:

    • Retirees as an aggregate group (2003-2018) reported scores above the Australian normative range on Global Life Satisfaction (GLS), overall Personal Wellbeing Index (PWI), and on the individual domains of standard of living, achieving in life, personal relationships and future security.
    • Compared to non-retirees, participants who were retired reported higher scores on the individual domains of standard of living, achieving in life, personal relationships, community connectedness and future security. However, retirees reported lower scores on the domain of health compared to non-retirees.

    SWB was measured using two indexes. One is the single-item, Global Life Satisfaction (GLS), which askes “How satisfied are you with your life as a whole?

    The second is the Personal Wellbeing Index (PWI), which reflects the average level of satisfaction across seven life domains – standard of living, health, achieving in life, relationships, safety, community connectedness, and future security.

    Differences in SWB among retirees over time:

    Group comparisons between retirees in 2003 and 2018 identified lower SWB among retirees in 2018 on overall PWI scores, and the domains of standard of living, health, achieving in life and personal relationships. This suggests that SWB has decreased somewhat over time among retirees in Australia.

    Group comparisons across each survey timepoint also largely supported these findings.

    • GLS, PWI, and the domains of standard of living, personal health, achieving in life, personal relationships and future security decreased over time but were still within the normative range for GLS, overall PWI, standard of living, achieving in life and personal relationships.

    For health, average scores fell from within the normative range to below the normative range:

    • Decreasing scores on GLS and personal relationships were similar
      between retirees and non-retirees.

    • Average scores on PWI, standard of living, health, achieving in life and future security were found to decrease at a somewhat faster rate among retirees compared to non-retirees.

    • Two domains showed increasing SWB over time: personal safety and community
      connectedness; however, these changes were similar for both retirees and non-retirees.

    Predictors of wellbeing over time by retirement status:

    Notably, the transition into retirement period was characterised by the highest levels of SWB, self-esteem, optimism, coping and resilience, as well as the lowest levels of depression.

    The predictors of SWB differed for the three retirement groups. Specifically, overall PWI in 2018 was predicted by the following factors (assessed in 2013):
    For those who transitioned into retirement, higher levels of satisfaction with achieving in life, personal relationships and personal safety.

    • For those who remained non-retired, higher levels of satisfaction with personal health and community connectedness.
    • For those who remained retired, higher levels of satisfaction with personal health, personal safety and community connectedness.
    • Additionally, for those who remained retired, higher levels of optimism in 2013 were predictive of smaller decreases in PWI scores.

    Notably, the effects sizes for these relationships were small, which suggests that there are likely to be a range of factors that contribute to SWB among Australian adults around the period of retirement.

    https://nla.gov.au/nla.obj-1618700446/view


    Law Council calls for more action on elder abuse

    The Law Council of Australia has continued to call for measures that will better protect older Australians.

    “Elder abuse is insidious and more prevalent than I think any of us would like to believe,” Law Council of Australia President, Mr Tass Liveris said.

    “Incidents of abuse may be physical, social, financial, psychological or sexual and can include mistreatment and neglect.

    “What makes it most devastating is that the perpetrator is often someone the older person trusts and relies on, such as a family member, friend or carer.

    “We must stamp out elder abuse and protect vulnerable members of our community.”

    The Law Council is calling for:
    • Appropriate, sustained and increased funding for specialist legal assistance and aged care advocacy services, government agencies, and relevant State and Territory tribunals that work towards reducing elder abuse.
    • Implementation of outstanding priorities identified in the Australian Law Reform Commission and Royal Commission into Aged Care Quality and Safety (Royal Commission) reports and the National Plan to Respond to the Abuse of Older Persons 2019-2023, including:
    • developing a new Aged Care Act which is consistent with the recommendations of the Royal Commission report by 1 July 2023; and
    • ensuring that those in residential aged care facilities have legal redress to protect them from abuse, whether perpetrated by care providers (including in the use of restrictive practices) or fellow residents.

    At the end of last year, the Law Council of Australia welcomed the decision by Commonwealth, State and Territory Attorneys-General to prioritise enduring power of attorney (EPOA) law reform to reduce the risk of older Australians being subject to financial abuse and looks forward to this work coming to fruition.

    EPOA arrangements are intended to ensure a person’s interests are protected when they lose capacity to make decisions for themselves. However, in the absence of adequate legal safeguards, financial elder abuse by appointed decision-makers may be facilitated by such arrangements.

    Law Council of Australia, 15/06/2022, https://www.lawcouncil.asn.au/media/media-releases/australia-must-address-elder-abuse

    Separated? Why you need to review your Will

    Scanlan Carroll Lawyers, Carol Pagès

    If you have recently separated, your focus will likely be on what to do about the property you have with your ex partner, and arrangements for your children.
    So why do you need to think about your Will?

    If you have a Will, it may be that each of you and your ex partner have left everything to each other, and then to your children.

    If you are separated, it is important to take the time to review all of your estate planning documents – this includes your Will, your Powers of Attorney, and your Binding Death Benefit Nomination of your superannuation fund.

    Each of these documents is explained below:
    Your Will – your Will sets out how you would like your assets distributed when you die and who is responsible for carrying out your wishes. You can also include clauses such as your nominated guardian for children under 18, and specific gifts that you would like to make. In your Will you specify who will be your executor. Your executor stands in your shoes when you die, and they will carry out your wishes by calling in your assets and distributing same to your chosen beneficiaries.

    Enduring Power of Attorney     – While you are alive, your attorney is able to stand in your shoes and carry out financial transactions on your behalf using the power – this can be buying or selling property on your behalf if you are away on holidays, transacting on your bank account paying your bills for you, and so on. Your nominated attorney can also make personal care decisions for you – such as choosing a care facility if you are unable to look after yourself, or limiting or restricting a person from visiting you if they consider this is not in your interests.
    A separate medical decision maker (which can be the same person) will be able to make medical decisions on your behalf, such as consenting to surgery if you are unable to. As the powers are enduring, they continue even if you later suffer an illness or injury which means you are unable to make decisions for yourself.

    Binding Death Benefit Nomination (BDBN)     – many people have significant balances in superannuation and also life insurance policies attached to their funds. As part of your estate planning process, we provide you with advice about your BDBN as superannuation is generally considered to be ‘outside’ of your estate and what is covered by your Will. It is important that this valuable asset is passed on to your loved ones in the way that you intended.

    Why is this important?
    Separation does not trigger the end of your existing Will, Powers of Attorney or BDBN. Many people are surprised to learn that divorce does not invalidate your Will. Divorce revokes a gift to your former spouse or appointment as your executor, and remarriage can invalidate your Will save for references made to your current spouse.

    What if I don’t have a Will?
    If you don’t have a Will, your assets will be passed on to your relatives according to the rules of intestacy. The rules in Victoria are that if you die, your estate goes to:
    Your spouse or domestic partner if you have no children;
    Your spouse or domestic partner, if you have children with that partner;
    If you have children to a previous relationship, your spouse will receive a statutory legacy (currently $480,700), your personal possessions, and 50% of the balance of your estate. Your children will equally share the remaining 50% of your estate.

    Case study – who inherits?
    Alex separated from Danielle three years ago. They were married however had no children. They were able to resolve their family law property division fairly amicably, and finalized their family law case with Consent Orders dividing their property.
    Alex and Danielle prepared their Wills when they were first married 10 years ago, each leaving their estate to the other.
    Alex has re-partnered with Mary, and they have been together for 20 months.
    Alex and Danielle haven’t yet filed for divorce as they have not gotten around to it yet. Alex has the forms on the kitchen table to sign.
    Alex tragically dies before signing his divorce form.
    Who do Alex’s assets go to………..?
    Depending on a number of factors – it’s Danielle – his former wife.
    The gifts to Danielle in Alex’s Will are not revoked as they are not divorced.
    If Alex owned property such as a house with Mary, and the house was in joint names – the house would be outside of Alex’s estate and pass straight to Mary.
    What if Alex didn’t have a Will?
    Based on the length of the relationship with Mary (along with several other factors which would need to be taken into account under the Family Law Act 1975 (Cth)), Mary is not likely to be considered a spouse.
    Danielle is still Alex’s legal spouse, as they are not divorced, so Danielle receives Alex’s estate.
    Summary
    Mary may have grounds to make a claim in either scenario, but this can be a long and expensive legal process which no one wants to go through after the loss of a loved one.
    The above example shows that how an asset passes on after death can depend on a number of factors. To ensure that your wishes are as you intended, it is important to obtain advice in relation to your family law and estate planning matters.
    This is important at separation, and the time following separation – for example, when you re-partner, it is worth considering the impact of your new relationship and property ownership upon your children, and your new partner.

    Incapacity: Choose Who Makes Decisions for You

    By Russell Kennedy – Clare Hesbrook and Ilana Kacev

    Estate Planning isn’t just about your Will, equally important are the documents in which you choose and who makes decisions for you if you lose capacity during your lifetime.

    Choose Who Decides     If you want to choose who makes decisions for you regarding your finances, property, lifestyle and medical treatment, it is essential that you have in place:
    • An Enduring Power of Attorney and an Appointment of Medical Treatment Decision Maker (if you live in Victoria); or
    • An Enduring Power of Attorney and an Appointment of Enduring Guardian (if you live in New South Wales).

    Losing capacity
    Currently it is estimated that almost half a million Australians are living with Dementia and these numbers are expected to continue to rise. Aside from Dementia, there are many other reasons why you may lose capacity to make decisions for yourself.

    Public Trustee & Guardian appointments
    On 14 March 2022, Four Corners aired an episode investigating the difficulties encountered by those who did not have these documents in place, at a time when they were deemed to have lost capacity. The Public Trustee & Guardian were appointed to take control of their finances and make decisions about their lifestyle, including where they lived.
    The Four Corners episode highlights the importance of proactive estate planning and especially, making arrangements in the event of your future incapacity.

    What it means when you have a Power of Attorney and Appointment of Enduring Guardian/Medical Treatment Decision Maker in place:
    1. You decide who makes decisions about your money and lifestyle. You can choose the people who care about you and respect your values.
    2. You decide how your chosen attorneys and guardians act and when their powers come into effect. You can provide directions about how they should act in end of life care decisions for example.
    3. You preserve your wealth. A public trustee and guardian takes payment for their services from your assets. When you choose your own attorney and guardian (unless you choose to appoint a professional attorney) you do not generally pay for acting.

    Taking positive action to put your estate planning affairs in order means that you get to decide who makes decisions over your life, rather than having it decided for you.

    Let’s talk about women and retirement

    Why is retirement different for women? Women retire with about 60% of the superannuation funds that men have. They live 5 years longer and they are far more reliant on the aged pension. On the plus side – women are more likely to retain their friendship networks, more likely to be the principal carer for their partner, their parents and their grandchildren, as well being more likely to volunteer to help others.
    Listen to my wide-ranging discussion with community radio 2RDJ broadcaster, Neil Lithgow about women and retirement. Listen here: