If you are entering aged care, the aged care provider may ask for your family member or legal personal representative (LPR) to sign a guarantee. This is completely normal and every provider has a slightly different policy around it.

It is not compulsory for a guarantee to be provided, but if it is part of the admissions process and if your family declines to sign, you may not be offered a place.

The guarantee covers payment of all fees and any damages you may cause in care.

Aged care providers may ask for guarantees to protect their ability to recover unpaid fees or any other amounts owing under the agreement. These amounts may include payments towards the RAD if the RAD or mixed combination payment method was selected in the contract (due 6 months after the date of permanent entry).

Providers sometimes experience children (who have control over finances) draining their parent’s bank accounts or failing to plan adequately and do not meet their financial obligations.

The Resident Agreement is only a contract between the resident and the provider and if fees are not paid the option exists to sue the resident, but this is very difficult to do so and leads to bad publicity. So, some facilities ask the family for guarantees to ensure the fee obligations are met.

Ensure that you have both Enduring Powers of Attorney (Financial and Personal) and Enduring Powers of Attorney (Medical Treatment). These are two separate documents. If you lose capacity, only an attorney appointed under these instruments can make decisions on your behalf
(including decisions such as signing a contract to enter an aged care facility).

It is important that you seek legal advice to understand the risks and obligations.

Author: Shaun Ganguly

Director and Financial Planner at Retirement Village Financial Advice and Aged Care Financial Planning, Shaun Ganguly specialises in complex Aged Care, Retirement Living, and Centrelink matters. He holds a Bachelor of Commerce (Finance & Economics), and is an FPA Accredited Aged Care Professional, Aged Care Guru, and Certified Financial Planner.

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