Navigating the 2025 Aged Care Reforms: Implications for Lawyers and Older Australians

Kiren Chitkara, Legal Writer, Practical Guidance Succession
Chloe Silvester, Head of General Practice, Practical Guidance

November 2025 marks one of the most significant transformations in Australia’s aged care system in over two decades. The commencement of the Aged Care Act 2024 (Cth) and accompanying legislation represents the culmination of reforms first recommended by the Royal Commission into Aged Care Quality and Safety. These sweeping changes aim to deliver a system that is more transparent, rights-based, and responsive to the needs of older Australians.

This blog unpacks the key legislative changes, explores their practical implications for lawyers practicing in succession, elder, and estate planning law, and outlines how these reforms intersect with evolving voluntary assisted dying (VAD) legislation.

A New Aged Care Framework: Rights at the Core

From 1 November 2025, the Aged Care Act 2024 (Cth) replaces the Aged Care Act 1997 (Cth) and related transitional and regulatory legislation. The reform is more than administrative – it represents a philosophical shift from a provider-centred model to a person-centred, rights-based system.

The Act enshrines a Statement of Rights, affirming every individual’s entitlement to dignity, autonomy, equitable access, and safe, high-quality care. These rights are now enforceable obligations, requiring providers and workers to act compatibly with them. The new framework also introduces:

• A Statement of Principles to guide providers in decision-making;
• An expanded Aged Care Code of Conduct, extending obligations to all aged care workers and “responsible persons”;
• Strengthened Aged Care Quality Standards, now embedded in legislation rather than policy instruments; and
• Clearer governance and accountability, through the establishment of a “System Governor” and expanded regulatory powers of the Aged Care Quality and Safety Commission.

This approach signals a shift from compliance to culture, placing older Australians at the heart of the system, not merely as service recipients, but as rights-holders.

Transitional and Supporting Legislation

To ensure a smooth transition, several companion statutes commenced alongside the new Act:

• Aged Care (Consequential and Transitional Provisions) Act 2024 (Cth) ensures continuity for residents and providers, preserving existing rights and obligations under the “no worse off” principle;
• Aged Care and Other Legislation Amendment Act 2025 (Cth) aligns related legislation, retains governance requirements such as refundable deposit registers, and maintains penalties for misuse of accommodation funds;
• Aged Care (Accommodation Payment Security) Levy Amendment Act 2025 (Cth) safeguards residents’ lump-sum payments by ensuring ongoing Commonwealth guarantees through the Accommodation Payment Guarantee Scheme; and
• Aged Care Rules 2025 prescribe operational rules, funding formulas, quality standards, and provider obligations.

These instruments collectively ensure that the rights and protections promised by the Act translate into practice across Australia’s complex aged care landscape.

Major Financial and Operational Changes

For practitioners advising on aged care funding and estate planning, the new cost structure and funding rules are crucial to understand.

1. Accommodation Payments and Refundable Deposits
Residents will continue to choose between paying by Refundable Accommodation Deposit (RAD), Daily Accommodation Payment (DAP), or a combination. However, significant changes apply:

• Providers may now retain 2% per annum of the RAD for up to five years.
• The maximum RAD has increased from $550,000 to $750,000, subject to Pricing Authority approval; and
• DAP interest rates will be indexed to the Consumer Price Index twice yearly.

These changes enhance provider sustainability but require families and lawyers to revisit estate liquidity planning, especially where the RAD forms a major estate asset.

2. Means Testing and Fee Caps
The means-tested care fee lifetime cap increases from approximately $82,000 to $130,000, reflecting the rising cost of care but also expanding the financial contribution expected from wealthier residents.

3. Sustainability and Transparency
Aged care providers are subject to new registration periods (between three months and three years), regular compliance audits, and enhanced reporting requirements under the Aged Care Rules 2025. For legal advisors representing providers, ongoing familiarity with these compliance obligations will be essential.

The Significance of a Rights-Based Framework

For elder and succession lawyers, the legal and ethical implications of a rights-based aged care system are profound. The Statement of Rights, set out in section 23 of the Act, replaces the former Charter of Aged Care Rights and includes express entitlements to:

• Independence, autonomy, and freedom of choice;
• Equitable access to services;
• Respect for privacy and dignity;
• The ability to raise concerns without reprisal; and
• Access to advocates and support persons.

Lawyers advising clients entering residential care, or those drafting enduring powers of attorney or guardianship instruments, must now consider these statutory rights as part of their duty to ensure informed decision-making.

Another critical area of consideration is end-of-life decision-making. In the ACT, the Voluntary Assisted Dying Act 2024 (ACT) will commence on 3 November 2025. Developments across Australia in end-of-life decision-making mean that lawyers are faced with new professional and ethical challenges.

The Cost of Aged Care: Planning Considerations for Succession Lawyers

The financial complexity of aged care arrangements has long intersected with estate and succession planning. The 2025 reforms further heighten this interplay:

• Upon the death of the resident, RAD repayments will remain payable to the resident’s estate (not to any contributing family member) but may be reduced by retention amounts. This reinforces the importance of clear loan documentation and testamentary provisions.
• The new lifetime means test will affect wealth management strategies, particularly for clients considering gifts, transfers, or trust distributions before entering care; and
• Home exemptions under assets testing are maintained but continue to phase out after two years unless occupied by an eligible spouse, carer, or dependent.

These considerations demand early and integrated financial and legal advice – areas where succession practitioners are uniquely positioned to assist.

Implications for Legal Practice

Succession and elder law practitioners will increasingly serve as navigators of the new care landscape, guiding clients through funding considerations, rights enforcement, and estate planning complexities.

Lawyers will need to collaborate more closely with financial advisors, aged care providers, and medical practitioners to provide holistic, compliant, and compassionate advice.

With enforceable rights and extended regulatory powers, disputes between residents, families, and providers may increase. Lawyers should prepare for potential growth in administrative review and civil enforcement proceedings under the Aged Care Act 2024.

Conclusion: A New Era of Dignity, Choice, and Legal Responsibility

The Aged Care Reforms of 2025 represent a once-in-a-generation recalibration of Australia’s approach to supporting older citizens. By embedding dignity, autonomy, and accountability into law, the reforms challenge all stakeholders (government, providers, and legal practitioners alike) to uphold not just care, but respect.

For succession and elder law lawyers, this new era demands both technical fluency and human empathy. Lawyers will play a pivotal role in ensuring that older Australians and their families can navigate these changes with confidence, clarity, and compassion.

For detailed guidance, tools, and precedents on advising clients under the new Aged Care framework, visit LexisNexis® Practical Guidance Succession.