Gifting in Respect of Residential Care Subsidy
As discussed in our earlier blog on “Residential Care Subsidy – Rest Homes”, in order to be eligible for a Residential Care Subsidy, you must fit certain criteria one of which is the asset threshold.
If you or your partner have gifted assets, there's a certain portion that won't be included as an asset.
That amount depends on when you made the gifts and the amounts you have gifted.
The rules relating to gifting for someone who applies for Residential Care Subsidy are quite different to those used by Inland Revenue.
When making the calculation as to the value of your assets, the Ministry of Social Development will make allowances for some gifting:
1. Gifted assets in the last 5 years
You may gift assets of up to the value of $7,500 per year, for each year in the last 5 years (from when you apply for the subsidy). These gifts will not be counted in your asset calculation.
This is a total of $37,500 of any assets you and your partner (even if they've died) have gifted in the last 5 years. NB in any given year the maximum you can gift is $7,500.00.
If your partner applies at the same time, this amount will double to $75,000 (but the Ministry of Health won’t count $57,500 each if you apply at different times).
2. Gifted assets longer than 5 years ago
Gifts up to $27,000 a year of any assets you've gifted longer than 5 years ago (from when you apply for the subsidy). $27,000 is the total amount between you and your partner (even if they've died).
3. Sold assets in exchange for a debt
Assets that you have sold will not be counted in your means assessment. This is because you no longer own the asset.
However, if you sold your assets in exchange for a debt then the outstanding debt that is owed to you will be considered an asset.
4. Gifting assets in recognition of care
Assets you've gifted to someone who's provided you with a high level of care if you've are not counted in your means assessment if:
You received care for at least 12 continuous months in the last 5 years and gifted these assets to the carer in the last 12 months (from when you apply for the subsidy)
Lived in the same home as the person providing the care
You were not receiving any funding for home-based disability support from the Ministry of Health, e.g., Home Support, meals on wheels
Have been able to stay in your home because you received care which meant you didn't need to get this payment.
Also:
The person providing the care cannot be your partner or dependent child
The type of care needs to be necessary to help you around the home, eg, help with bathing or toileting.
Your gifts in recognition of care cannot be more than $37,500, when combined with other allowable gifting in the last 5 years (from when you apply for the subsidy).
*See our upcoming Blog regarding “Residential Care Loans in respect of Residential Care Subsidy” for more information on Residential Care Loans.
PLEASE NOTE
The purpose of this is to give an overview of gifting that is allowed when applying for a Residential Care Subsidy.
The information contained here is not an exhaustive list of what is ‘allowed’ and what is ‘not allowed’.
Taking the thresholds into consideration, planning ahead, such as annual gifting etc, can help significantly in the event that you need to apply for a subsidy in the future and thereby helping you meet the asset/income threshold.
It is important to seek legal advice well in advance of when you think you may need care so that planning can commence as early as possible.
Please contact me mjr@younghunter.co.nz or one of my colleagues in the Commercial Team at Young Hunter, https://www.younghunter.co.nz who will be able to explain in detail and walk you through the process.
We can also assistance you in planning ahead and protecting assets, in the event that in the future you do need long term care.
References:
https://www.workandincome.govt.nz/products/a-z-benefits/residential-care-subsidy.html
https://www.seniorline.org.nz/rest-homes-hospitals/cost-of-care/income-and-asset-testing/
This article is current as at the date of publication and is only intended to provide general comments about the law. Young Hunter accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.
