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A Guide to Probate Refundable Accommodation Deposit in NSW

As Australia's population ages, more individuals are transitioning into aged care facilities, which often require a significant payment known as a Refundable Accommodation Deposit (RAD) to secure accommodation. This deposit, regulated under the Aged Care Act 1997, is a substantial financial commitment, and its management upon the resident's death is a crucial concern for many families. This guide provides a detailed overview of how RADs are refunded after a resident's death, the role of probate in this process, and the legal considerations involved.

Understanding the Refundable Accommodation Deposit (RAD)

A Refundable Accommodation Deposit (RAD) is a lump sum paid by or on behalf of a resident entering aged care. This deposit is essentially a loan to the aged care provider, which is refunded when the resident leaves the facility or passes away. The RAD can be paid as a lump sum, through periodic payments, or as a combination of both.

The Importance of Probate in Reclaiming RAD

Upon the death of a resident, the aged care provider is required to refund the RAD. However, this process is not automatic; the aged care provider typically requires the production of a Grant of Probate or Letters of Administration before releasing the funds. This legal requirement protects the provider by ensuring that the refund is made to the rightful representative of the deceased's estate.

Grant of Probate is a legal document issued by the Supreme Court confirming that the executor named in the will is authorized to administer the deceased's estate. Letters of Administration are similar but are issued when a person dies without a valid will, appointing an administrator to manage the estate.

Without these documents, the aged care facility will not release the RAD. If the RAD amount falls below a certain threshold, the facility may exercise discretion, but generally, a Grant of Representation is necessary.

Steps to Reclaim a RAD

Obtaining the Grant of Probate or Letters of Administration:

  • The first step is to apply for a Grant of Probate or Letters of Administration. This process can take 4-6 weeks if the estate is straightforward.

  • It involves confirming the executor or administrator's authority to manage the deceased's assets.

Submission to Aged Care Provider:

  • Once the Grant of Probate or Letters of Administration is obtained, it must be presented to the aged care provider.

  • The provider is then obligated to refund the RAD within 14 days of receiving this documentation.

Interest Payments:

  • The aged care provider must pay interest on the RAD from the day after the resident's death until the refund is made.

  • There are two interest rates to consider:
    • Base Interest Rate (BIR): Applies from the day after the resident's death until the end of the 14-day refund period.

    • Maximum Permissible Interest Rate (MPIR): Applies if the refund is not made within the 14-day period and continues until the RAD is refunded.

Scenarios Involving RAD Refunds

Resident Dies Without a Will:

  • If the resident dies intestate (without a will), the RAD refund is paid to the estate administrator, usually the closest next of kin, once the Grant of Letters of Administration is obtained.

Insolvency of Aged Care Provider:

  • The Australian Government guarantees the RAD under the Accommodation Payment Guarantee Scheme. If the provider is unable to refund the RAD due to bankruptcy or insolvency, the government steps in to ensure the refund is made, along with the prescribed interest.

Resident Moves to Another Service:

  • If a resident permanently relocates to another aged care service, the RAD must be refunded based on the notice period given. The timing of the refund and applicable interest rates depend on whether the notice was provided in advance or after leaving.

Legal Assistance and the Role of Solicitors

Navigating the process of reclaiming a RAD can be complex, especially during the emotionally challenging time following a loved one’s death. Solicitors specializing in probate and estate matters can expedite the process, ensuring that the necessary legal documentation is obtained swiftly and that the refund is processed without unnecessary delays. Many legal firms, such as National Probate and Estates Group, handle hundreds of such applications annually, often reducing the wait time for probate from several months to just a few weeks.

Conclusion

The Refundable Accommodation Deposit (RAD) plays a significant role in the financial planning of aged care. Understanding the process of reclaiming this deposit after a resident’s death, including the legal requirements and timelines, is essential for families managing the deceased's estate. By following the correct procedures and seeking professional legal assistance when necessary, the process can be handled efficiently, ensuring that the estate is settled according to the deceased’s wishes and that the RAD is refunded promptly.