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The Director-General of Health must, as soon as practicable after 1 July in each year, give written notice of the current amount of the income-from-assets exemption. P meets the criteria for eligibility for the residential care loan scheme specified in a written notice given by the Director-General of Health. The Director-General of Health must, by written notice, determine the maximum contribution that applies in each region.
Those costs then get paid on the sale of the property or within 12 months from the date of your death . If you have settled assets into a trust, and income is available from those trust assets or could be available (e.g. if the trust owns a house that can be sold), then MSD expects that the trust’s available income will be paid towards your care. If you do not get that income paid to you from the trust without good reason, MSD has discretion to consider it anyway. An example of this is where a trust owns a property where you have lived most of your life and the trustees decide not to sell the property.
Step 3 - We'll check what assets you've gifted or sold
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.
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.
Residential care loan
$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.
MSD has determined under section 45 that S’s relationship status has changed for the purposes of this Act. For the purpose of a means assessment under this Act, MSD may make a determination to regard as a party to a de facto relationship any 2 people who, not being legally married or in a civil union, have entered into a de facto relationship. An income assessment must be conducted in accordance with Part 3 of Schedule 2.
Work and Income will take these assets into account when completing your financial means assessment:
For couples; If both you and your partner are in care, your total assets must be less than $239,930. When a change in living arrangements is required due to health needs of elderly, the process usually starts with an assessment by a needs assessor under the relevant DHB . An assessment is completed on whether a person needs care at a rest home level, specialist dementia unit, long-term care hospital or psycho-geriatric unit.
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.
Income test (financial means assessment as to income)
The first is a period of 5 years before an application for the subsidy and the second is all years predating that 5 year period. Within the five years before applying for the Subsidy (“the gifting period”) up to $6,000.00 per year per couple, or, in the case of a single person, per person. By the time she needed to go into a care home in 2014 nearly $330,000 worth of assets had been gifted. The 2018 case related to then 80 year old, Gwyneth Broadbent, who over a period of time sold the family home, and holiday home, into family trusts, within the allowable limit of $27,000 a year.
HOWEVER, there are some circumstances where it may be possible to give away your assets. This means that they are not included, by your local authority, in any calculation to determine the value of your capital when assessing nursing home costs. Part 3 of Schedule 2 in the Amendment Act defines income that is exempt from a person’s financial means assessment.
Some people are deciding to wind up the trust due to the new obligations for trustees and increased compliance costs. Before considering whether to wind up a family trust, it is advisable to consider how MSD may treat any loans that have been progressively forgiven, or future application of trust income, in terms of eligibility for the RCS. Where a person has been living rent-free in a trust’s property but now requires care, and the trustees of the Trust decline to provide the equivalent monetary value of support, MSD may consider that the difference is deprivation. The case of Chief Executive of the Ministry of Social Development v Broadbent deals with income deprivation and family trusts.
Gifting includes the common usage of the word and also the forgiveness of debts, including to a Trust. If an asset, such as a family home, is transferred to a Trust, the Trust owes the transferors the value of that asset. This debt is “paid off” without exchange of funds, but rather by forgiveness of the debt. MSD will consider the history of an applicant’s gifting of assets (“gifting”) to assess whether or not it considers the applicant has engaged in “excess gifting” to deprive themselves of assets with the purpose of qualifying for the Subsidy.
This article aims to assist people who wish to understand how their asset planning may affect their eligibility for the Subsidy. In this case, Mrs Broadbent and her late husband had sold their house to a trust. The purchase price that the trust paid was a market price, so the Broadbents received ‘fair value’. The trust had no money to pay the purchase price, so the Broadbents lent the whole of the purchase price to the trust and then gradually forgave the debt over several years, finishing more than five years before Mrs Broadbent needed to go into care. Do note that your house and car are exempt from the assessment of assets when it’s the main place where your partner, who is not in care, or a dependent child, lives.
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