Thinking of gifting your property to a family member…be careful of rest home subsidy limits…

by Rainey Collins - Michelle Buckley

A retired couple owned a small seaside apartment.  One partner’s health was deteriorating, so they decided that it would be best if she entered a rest home.  They were aware that there were asset thresholds that you had to be under in order to be eligible for a rest home subsidy.

They decided they want to gift their apartment to their children, which they thought would push them under the means testing threshold.  They went to their lawyer to discuss this and were surprised to hear that gifting an asset like that could create problems for rest home subsidies.

How you can be eligible…

Your assets need to be under a certain amount in order to be eligible for a rest home subsidy (which is the government contributing towards the costs of your rest home care).  Whilst either you or your partner/spouse remains living in the house you must have either:

  1. Total combined assets of less than $123,025 excluding the value of your house and car; or
  2. Total combined assets of less than $224,654 including the value of your house and car.

If you are single or your spouse/partner is already in long term residential care, option 1 above is the only option that applies to you.

Gifting limits…

In order to make a gift without impacting on an application for a rest home subsidy, the maximum amount a single person can gift is $27,000 per annum, while the maximum amount a couple can gift is $13,500 each (totalling $27,000 between them).

However within the five years immediately prior to making an application for a rest home subsidy the current allowed gifting amount reduces to $6,000 a year per person.  Therefore, the current balance of $7,500 per year per person (for the preceding five years from the date of the residential care subsidy application) can be taken into account as part of your personal assets when completing a financial means assessment.

Any gift of more than $27,000 in any one year will likely be seen as “deprivation of assets” by WINZ when making an assessment for a rest home subsidy, and the whole gift could be “clawed back” by WINZ and counted as an asset in your hands.

If the retired couple mentioned above were to “gift” their apartment to their children, they would need to have done so gradually over time within the $27,000 limit to reduce potential rest home subsidy consequences.

In order to limit those unexpected consequences it is important to take legal advice before you consider gifting assets.

Michelle Buckley
Legal Executive
Wellington

For more information on this topic, please contact the Rainey Collins office (0800 733 424)

 

 

 



We welcome your feedback

Hi there! We want to make this site as good as it can for you, the user. Please tell us what you would like to do differently and we will do our best to accommodate!


 
 
We've updated our Privacy Statement, before you continue. please read our new Privacy Statement and familiarise yourself with the terms.
Feedback