1. Selling the house without understanding the consequences.
The rules around the principal residence are probably the most important when considering the costs of residential aged care.
First of all, the house could be largely exempt from the aged care means tests for 2 years (and even longer if you set things up right). Better still, if you rent the house out, this income is exempt from testing in the same way.
Of course you may need to sell the house to fund accommodation and care costs..but do you really have to?
2. Not understanding how accommodation costs work
All residents have a choice in how they pay for accommodation - either by lump sum or cashflow, and there may be government support for those eligible.
Accommodation costs paid by a lump sum Refundable Accommodation Deposit are guaranteed to be returned by the Government, and are exempt from Centrelink tests. The Centrelink exemption is a big opportunity.
Are you making the most of this?
3. Getting confused between all the terms.
The terms around residential aged care are complex. Try setting everything up on the same basis, like weekly or yearly, to match up with income like the aged pension or other investment income - don't let this one get you down.
4. Being a landlord is easy on paper
After looking at all the options available to the resident, renting out the principal residence may make beautiful sense. However, what happens if tenants don't appear (or don't pay)? How long will your reserves last? The ability to retain the home may be based on a scenario that has a pretty skinny margin for error.
Having said this, understanding how things could work if you are a landlord may give you a bit of breathing space when considering selling the property. Being able to run the right campaign or hold out for a better price for the house is going to be easier when you understand exactly what your options are.
5. Not solving for cashflow.
Have you understood all the costs before signing on the dotted line? The daily costs of care can be significant. You would want to be comfortable that you have a bit in reserve. Cashflow is the big story when planning aged care costs, and it could be difficult to plan jut how long mum or dad's care situation may need to be funded. Make sure the whole setup is viable.