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Personal allowance, in this Act and Schedule 2, means an amount of benefit, specified in regulations made under section 74, that a person is not required to contribute to the cost of LTR contracted care provided to the person. Determined to have assets equal to or below the applicable asset threshold. When determining if an applicant is eligible for the RCS, MSD considers whether the applicant has deprived themselves of assets or income. If deprivation has occurred, discretion can be exercised to count deprived assets and income back into the financial means assessment. The MSD has not yet decided how it will calculate that ‘deprivation’, but it will no doubt be complex.
The Court of Appeal held that MSD was not entitled to gross up the value of the assets of the family trust, calculate a notional income from that value, and treat that as if it were Mrs Broadbent’s income. Rather, MSD must adopt a calculation that recognises Mrs Broadbent’s notional income from the debt would have steadily reduced over time and then determine, in light of that, what a reasonable current income figure should be. This is to determine the amount that a person is required to contribute to the cost of their care. The Ministry of Social Development is responsible for assessing applications and determining whether an applicant qualifies for the Subsidy.
Pre-paid funeral trusts
The decision is s fairly straightforward exercise in statutory interpretation except for the argument that was advanced that section 19 of the New Zealand Bill of Rights Act applies. This affirms the right not to be discriminated against and the argument was that by applying a $27,000 limit to couples they were discriminated against compared with single applicants to whom the same limit applied. The Court of Appeal dismissed the argument but in terms that suggest that if a couple has not organized their finances as a single unit it may be discriminatory to limit gifts into trust to $27,000 between them. This could be significant for couples such as those in second relationships who have maintained a degree of financial separation. This amount includes any assets you've gifted to someone in recognition of care.
MSD must ensure that a copy of the record of the means assessment is provided to the person to whom it relates. In subsection , 90-day period means the period of 90 days before the date of means assessment. MSD must arrange for a means assessment to be conducted as soon as practicable after receiving an application.
Step 2 - We'll check what assets you have
$27,000 is the total amount between you and your partner (even if they've died). Been able to stay in your home because you received care which meant you didn't need to get this payment. We won't count up to $7,000 of assets you've gifted each year in the last 5 years . This is a total of $35,000 of any assets you and your partner (even if they've died) have gifted in the last 5 years. If you're 65 or over and your assets are above the threshold because you own your own home, you may be able to get a Residential Care Loan.
This was the subject of the recent decision of the Court of Appeal that clarified the meaning of ‘deprivation’ in the context of the MSD’s income assessment. Qualify for other payments after you go into care, if they aren't getting any payments from us. If you don't know what's included in the cost of your care, you should talk with your rest home or hospital.
Deprivation of property and income rules
Part 2 of Schedule 2 of the Act defines assets that are exempt from a person’s financial means assessment (‘exempt assets’). If a resident received care for a longer period than 90 days before the application for a financial means assessment was received, then they are liable to fully pay for the cost of care received before the 90 days. The assets counted in asset threshold A include the house and car; cash, savings; investments; shares; loans to other people ; boats; caravans; campervans; and investment properties. If you don’t qualify for a subsidy, you may be eligible for a residential care loan, which is similar to a reverse mortgage and means that you would owe MSD the costs of your care.
If you have a trust and you have transferred assets to the trust in return for a debt that you have forgiven over time, and you are concerned about residential care subsidies, we would recommend talking with us to discuss the next steps. Increasing numbers of elderly New Zealanders are going into residential care and seeking the government’s residential care subsidy. The legislation governing the subsidy is the Residential Care and Disability Support Services Act 2018, and the assessment procedure is overseen by the Ministry of Social Development .
If you have a family trust and are undertaking incremental gifting, we have a dedicated gifting team member to ensure that annual gifting to your trust is not overlooked. However a person who is needs assessed as requiring dementia or hospital care does not have to apply for a financial means assessment in order to receive the ‘top-up subsidy’ . Any increase in the value of a person’s assets included in the initial financial means assessment will be excluded from any subsequent review of a person’s means assessment. Yes, they must have a financial means assessment from Work and Income. The underlying principle of the residential care subsidy legislation is that if you can pay for your own care, you should.
When applying for public funding you are required to complete a declaration of assets sold or gifted and provide trust documents if you have set up a trust. Any interest generated from the pre-paid funeral amount of the person or of the person’s spouse, as defined in Part 2, Schedule 2 of the Act. A person must have a needs assessment before applying for a financial means assessment. You can gift up to $27,000 per couple, per year, for up to 5 years prior to applying for a subsidy.
Health and disability If you want to work, we can support you to find the right job for you. Residential Care Subsidy — including information about asset limits. You are 65 years of age or older and your assets are within certain limits. You are between 50 and 64 years old, single, and have no dependent children.
Once you have been assessed as needing long-term residential care in a hospital or rest home you will need to complete the Application form including the means assessment. A qualifying person or special case person whose spouse or partner is not a qualifying person or special case person may elect to have Threshold A in clause 1 apply to P instead of having Threshold B in clause 1 apply. Whose spouse or partner is not a qualifying person or special case person but who has elected, under clause 2, to have Threshold A apply to P rather than Threshold B. MSD is satisfied that the person or the person’s spouse or partner has directly or indirectly deprived the person of any income or assets. The income of a person who is in a relationship includes the income of the person’s spouse or partner. A person who is an elderly victim of crime is not liable to contribute any amount to the cost of that person’s LTR contracted care and a funder must pay the whole of that cost.
The removal of gift duty means that gifts into trust can now be made without duty consequences and that is likely to lead to many cases where even greater excessive transfers occur than when the duty exemption limit applied something of a brake on gifting. In the first of these periods gifts exceeding $6,000 per annum can be clawed back and assumed to be available to the claimant. In the second gifts exceeding an annual threshold can be clawed back. In short the question was whether gifts of $27,000 per couple or $27,000 per applicant could be made without claw-back. The claw-backs are not limited to trust transfers and include all gifts, such as to family members.
This is a very specialised area of law, and each persons’ structures and circumstances are different, so each application warrants an individual approach. If there is a family trust or gifting involved then we recommend that you take legal advice prior to submitting an application to MSD, to ensure that you have provided the relevant information. There are many factors to consider, and the examples used may not apply in your situation. If the total value of your assets under the applicable asset limits, then you are able to move on to the second stage of the means assessment, the income test. Qualifying persons who have entered into a loan agreement with the Crown under the residential care loan scheme. MSD is satisfied have not been realised by that person, or by that person’s spouse or partner.
Our trusts team provide advice about residential care subsidies and can assist with any questions or concerns regarding the process. If you have historically gifted more than this, MSD has the discretion to consider those excess gifts as an asset of your own. This is true of all gifts, so will include gifts to trusts as well as gifts to people.
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