Residential Care Subsidy – Allowable Gifting
As discussed in our earlier blog, "Who Pays for My Care If I Am Assessed as Needing Full-Time Permanent Residential Care?", one of the criteria for eligibility for a Residential Care Subsidy is the asset threshold.
If you or your partner have gifted assets, a certain portion of those gifts won't be included in your asset calculation. How much depends on when you made the gifts and the amounts involved.
The rules relating to gifting for someone applying for a Residential Care Subsidy are quite different from those used by Inland Revenue.
When calculating the value of your assets, the Ministry of Social Development will make allowances for some gifting, as set out below.
1. Gifted Assets in the Last 5 Years
You may gift assets of up to $8,500.00 per year, for each of 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 $42,500.00 for any assets you and your partner (even if they've since died) have gifted in the last 5 years.
If your partner applies for the subsidy at the same time as you, this allowance doubles to $85,000.00 — however, the Ministry of Social Development will not allow $42,500.00 each if you apply at different times.
2. Gifted Assets Longer Than 5 Years Ago
You may gift up to $27,000.00 a year of any assets gifted longer than 5 years ago (from when you apply for the subsidy). This $27,000.00 is the total amount allowed between you and your partner (even if they've since died).
3. Assets Sold in Exchange for a Debt
Assets that you have sold will not be counted in your means assessment, because you no longer own the asset.
However, if you sold an asset in exchange for a debt, the outstanding debt owed to you will be considered an asset.
4. Gifting Assets in Recognition of Care
Assets you've gifted to someone who has provided you with a high level of care are not counted in your means assessment if all of the following apply:
You received care for at least 12 continuous months in the last 5 years, and gifted the assets to the carer within the last 12 months (from when you apply for the subsidy).
You lived in the same home as the person providing the care.
You were not receiving any funding for home-based disability support from Health New Zealand – Te Whatu Ora (e.g., Home Support, Meals on Wheels).
You were able to stay in your home because you received this care, meaning you didn't need to access that funding.
In addition:
The person providing the care cannot be your partner or dependent child.
The care must be of a type necessary to help you around the home — for example, help with bathing or toileting.
Your gifts in recognition of care cannot exceed $40,000.00 when combined with other allowable gifting in the last 5 years (from when you apply for the subsidy).
See our other blogs:
This article gives an overview of the gifting allowances available when applying for a Residential Care Subsidy. It is not an exhaustive list of what is and is not permitted.
Taking these thresholds into consideration and planning ahead — for example, through annual gifting — can significantly help if you need to apply for a subsidy in future, by assisting you to meet the asset and income thresholds.
It is important to seek legal advice well in advance of when you think you may need care, so that planning can begin as early as possible. Not all situations are the same.
Please reach out to Michelle Rossiter or one of our colleagues in the Commercial Team at Young Hunter. We would be happy to meet with you to explain in more detail how gifting may affect your situation, or that of a family member, and to assist with planning ahead and protecting assets in the event that you need long-term care in future.
This article is current as at the date of publication and is intended only to provide general comments about the law. Young Hunter accepts no responsibility for reliance by any person or organisation on the content of this article. Please contact the author if you require specific advice about how the law applies to you.
