What to do (and what to avoid) when transitioning yourself or a loved one into aged care

Moving into aged care is rarely an easy decision. It often happens after a fall, a diagnosis, a hospital stay, or a period of carer burnout. Families are then asked to make major emotional, financial and legal decisions in a very short window, and that pressure is where costly mistakes happen.

Accommodation agreements can involve six-figure sums. Fee structures can be hard to compare. Forms can be delayed or submitted incorrectly. On top of that, families are often managing grief, guilt and decision fatigue at the same time.

As Dwight D. Eisenhower put it: 

“In preparing for battle, I have always found that plans are useless, but planning is indispensable.”

That idea applies here. The exact pathway into aged care may change, but having a plan still makes all the difference.

Why families feel stuck when aged care decisions need to happen fast

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When a loved one needs care urgently, it’s natural to focus on the most immediate problem: finding a room, signing paperwork, and making sure the move happens. But aged care decisions should never be treated as day-one-only decisions; a rushed choice now can have flow-on effects for years.

Families often run into trouble when they:

• Sell the family home before properly comparing RAD and DAP options 
• Focus only on the first month of fees, instead of modelling the next two to five years 
• Delay means assessment paperwork, leading to incorrect fees or arrears 
• Sign accommodation agreements, assuming they are standard and easy to unwind 
• Overlook the emotional adjustment required for both the resident and the family

This matters even more now than ever, as the new Aged Care Act began on 1 November 2025, bringing changes to aged care rights, fee arrangements, and reporting obligations. The Australian Government’s health department confirms the new Act started on 1 November 2025 and applies across government-funded aged care.

The practical takeaway is simple: treat an aged care move like a project. It needs a timeline, a budget, clear decision-makers and the right professional support.

A clearer pathway into aged care 

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One of the best ways to reduce stress is to break the transition into stages. Rather than trying to solve everything at once, focus on what needs to happen first, next and later.

Step #1: Start conversations early

If possible, begin talking before a crisis point. This helps surface preferences around location, room type, budget, cultural needs, spiritual support and the type of environment that would feel right. It also gives space to acknowledge the emotional side of the move. For many families, grief and guilt sit underneath every practical decision.

Early conversations do not remove the difficulty, but they usually widen the options.

Step #2: Get assessed through My Aged Care

For people seeking government-subsidised aged care services like My Aged Care, an assessment is the first formal step. You need to be assessed before accessing aged care services for the first time, and you can apply online for yourself or for someone else.

This stage can take time, so it is worth starting as early as possible. 

Here’s more information on how to get assessed for My Aged Care.

Step #3: Shortlist providers carefully

Once eligibility is underway, families can start comparing providers. My Aged Care offers provider search and comparison tools to help families look at homes in their area and review factors such as services and Star Ratings.

At this point, it is worth asking:

• Does the home feel welcoming and calm?
• What is included in the room and daily support?
• Are there cultural, language or spiritual supports available?
• How does the provider communicate with families?
• What do the published room prices and daily payment equivalents look like?

Step #4: Model the money before making big asset decisions

This is one of the biggest gaps in the original draft, and also one of the biggest opportunities to strengthen the piece.

Families need to understand not just what they will pay on entry, but how the numbers may change over time. That includes accommodation costs, daily fees, means-tested contributions, pension impacts, cash flow and estate planning implications. This is where strategic advice can materially change outcomes.

Step #5: Get the paperwork right

This is where accurate paperwork becomes crucial. Services Australia’s SA457 form is used to calculate residential aged care costs, while SA485 is used to provide property details where relevant.

Personal or financial circumstances must be reported within 28 days, because those changes can affect how much someone contributes towards aged care costs. That means paperwork is not just administrative; it directly affects cost outcomes.

Step #6: Plan for the first 30 to 60 days after the move

The transition does not end once contracts are signed and the move happens. In many ways, that is when the real adjustment begins.

The first month is often the hardest. Having a settling-in plan can make a meaningful difference to comfort, routine and confidence.

Understanding aged care accommodation costs

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When someone moves into residential aged care, they may be asked to contribute to their accommodation costs. People can usually pay in one of three ways: a refundable lump sum, daily payments, or a combination of both.

RAD, RAP, or a mix of both

A Refundable Accommodation Deposit, or RAD, is a lump sum paid to the provider. A Daily Accommodation Payment, or DAP, is a daily payment instead of a full lump sum. Families can also combine the two.

A simple way to think about it is this:

• A RAD is more like a lodged accommodation amount
• A DAP is more like paying for the room over time
• A combination approach can give more flexibility

The right option depends on cash flow, assets, pension impacts, estate goals and how long care may be needed.

As of 1 November 2025, daily accommodation payments are indexed twice yearly. These arrangements have also changed how accommodation and care contributions are handled for new residents.

Understanding daily fees and means-tested contributions 

Under current government guidance, residential aged care residents may face different arrangements depending on when they entered care and which fee arrangements apply to them. The Department of Health, Disability and Ageing confirms that under the 1 November 2025 fee arrangements, residents may pay a hotelling contribution and, in some cases, a non-clinical care contribution.

You don’t have to memorise every fee label, but it is important to understand that:

• Entry timing matters
• Fee rules can differ depending on when someone entered care
• Means assessment details can change what is payable
• A decision that looks cheaper today may not stay cheaper over time

That is why a proper cash flow model matters.

Why legal advice matters before signing anything

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Accommodation agreements are not lightweight documents. They can lock in payment structures, retention rules, refund terms, exit provisions and dispute processes. Once signed, changing course can be difficult.

Before entry, families should make sure:

• Enduring powers of attorney are valid and current
• Any guardianship or personal decision-making arrangements are clear
• Advance care planning documents reflect current wishes
• Accommodation agreements are reviewed before signing

This is where legal review with Watson Legal can prevent expensive mistakes and reduce the risk of disputes later.

The biggest mistakes families make, and how to avoid them

Mistake	Why it hurts	Better approach
Signing before fully understanding the agreement	This can lock in decisions before the family understands how fees, refunds and exit terms work.	Request documents early, slow the process where possible, and get advice before signing.
Rushing to sell the home	The home is often seen as the obvious funding solution. But selling too soon can affect pension outcomes, reduce flexibility and narrow accommodation payment options.	Model the financial scenarios first, then make the property decision second.
Focusing only on upfront fees	Aged care costs are not static. They can shift with means assessments, indexation and changing circumstances.	Forecast the next two to five years, not just the entry month.
Getting forms wrong or leaving them too late	Incorrect or incomplete information can delay assessments or create backdated adjustments.	Complete the right forms, keep records current, and diary reporting deadlines.
Assuming residential care is the only option	Sometimes respite, in-home support or other aged care pathways can create breathing room while the family plans properly.	Explore temporary and support-at-home options where appropriate. My Aged Care outlines assessment and service pathways for older Australians seeking help at home or in residential care.
Treating the move as purely practical	Even when the finances are right, the move can still feel deeply unsettling.	Plan for emotional adjustment, not just administrative completion.

A settling-in playbook for the first 60 days

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Stage #1: Before the move

Keep conversations calm and unhurried. Let your loved one express fears, preferences and concerns. Focus on what support may improve daily life, whether that is safety, meals, company, medication support or reduced household pressure.

Tours are useful here because they replace abstract fear with something concrete.

Stage #2: Moving day

Try to arrive at a quieter time. Confirm the first-week plan with staff. Personalise the room early with familiar items such as photos, a favourite blanket, music, books or small keepsakes. Small touches can make a big difference.

Stage #3: Weeks 1 to 4

Expect the first month to be the hardest. Keep visits regular but not overwhelming. Encourage one or two manageable activities. Help build a routine rather than trying to make everything feel normal immediately.

Stage #4: Weeks 5 to 8

This is a good time to review how things are going. Check mobility, nutrition, social connection and communication with staff. Confirm that key financial details remain accurate and up to date.

Case study: The weekend whirlwind

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• The situation: Mary, aged 84, had a fall on Friday, and the hospital wanted discharge into respite by Monday. Her family felt pressure to sell the home quickly to fund a $550,000 room.

 

• What nearly went wrong: An immediate sale may have reduced pension flexibility and locked the family into a rushed funding decision.

 

• What changed the outcome: Respite created time. The family updated financial records, reviewed provider options and compared funding scenarios before making a major asset decision.

 

• The result: No fire sale, a smoother transition, and a more measured move into care.

“It always seems impossible until it’s done”—Nelson Mandela

Case study: Forms, fees and fix-ups

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• The situation: Paolo, aged 79, entered care under the newer arrangements. Incomplete financial information led to fees being recalculated later, creating arrears.

 

• What changed the outcome: The paperwork was corrected, authorities were updated, and the payment structure was remodelled to preserve liquidity without overcommitting to a large lump sum.

 

• The result: Arrears were cleared, monthly costs became more stable, and the family had a clearer plan for the future.

What expert advice can change

Without advice, families often try to make permanent decisions under emotional pressure and with incomplete information. With the right support, families can gain:

• A clear decision hierarchy
• A better understanding of RAD, DAP and combined payment options
• A cash flow view over the next two to five years
• More confidence around means testing and pension impacts
• Better paperwork discipline
• Legal clarity before signing agreements
• A more supportive settling-in process for the person entering care

The biggest mistake families make is assuming aged care is only about finding a room. It’s also about understanding rights, structuring costs, managing paperwork, protecting assets, and supporting a person through a major life change.

“The best time to plant a tree was 20 years ago. The second-best time is now.”

That is especially true for aged care planning. The earlier a family starts, the more options they usually have.

If you are weighing up aged care for yourself, a parent or another family member, Elliot Watson Financial Planning can help you make sense of the process and plan the next steps with clarity. Our team can guide you through the financial side of aged care, including accommodation costs, cash flow, asset considerations and how each decision may affect your broader financial position. 

Contact Elliot Watson Financial Planning to discuss your situation and get advice tailored to your family’s needs, so you can move forward with greater confidence and peace of mind.

Article by Geoff McQueen – Provisional Financial Adviser

Disclaimer:

The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness regarding your objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. The views expressed in this publication are solely those of the author; they are not reflective or indicative of the licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the author’s express written consent. Elliot Watson Financial Planning Pty Ltd and its advisers are Authorised Representatives of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.