Many retirees consider gifting their property to family members, often with the aim of meeting the asset thresholds required to qualify for a rest home subsidy. However, this seemingly straightforward solution can have unexpected consequences, potentially affecting eligibility for government assistance. In this guide, we explore the implications of gifting property in the context of rest home subsidies and emphasize the importance of seeking legal advice to navigate these complexities.

The Decision That Raised Concerns:

A retired couple, facing health challenges, owned a cozy seaside apartment. They were well aware of the asset thresholds that must be met to qualify for a rest home subsidy, which assists with the costs of rest home care. In an effort to meet these thresholds, they considered gifting their apartment to their children. Little did they know that such a decision could introduce complications when applying for rest home subsidies.

Eligibility for Rest Home Subsidies:

To be eligible for a rest home subsidy, certain asset thresholds must be met. As long as either you or your spouse/partner continues to live in your house, the criteria are as follows:

1. Total combined assets of less than $149,845 (excluding the value of your house and car).
2. Total combined assets of less than $273,628 (including the value of your house and car).

If you are single or your spouse/partner is already in long-term residential care, the second option applies to you.

Gifting Limits:

Making a gift without affecting your rest home subsidy application has specific limits:

• A single person can gift a maximum of $27,000 per annum.
• A couple can gift up to $13,500 each, totaling $27,000 between them.

However, within the five years leading up to a rest home subsidy application, the allowed gifting amount decreases to $7,500 per year per person.

It’s important to note that any gift exceeding $27,000 in a single year could be classified as “deprivation of assets” by WINZ (Work and Income New Zealand) when assessing rest home subsidies. This might result in the entire gift being “clawed back” by WINZ and counted as an asset in your possession.

Planning and Legal Advice:

The retired couple mentioned earlier, who considered gifting their apartment to their children, would have needed to do so incrementally within the $27,000 limit to avoid potential rest home subsidy repercussions.

To prevent unexpected consequences and ensure you make informed decisions regarding gifting assets, it is imperative to seek legal advice. Leading law firms dedicated to offering cost-effective solutions often provide fixed-price initial consultations to help you understand your options quickly.

Gifting property to family members as a means to meet rest home subsidy asset thresholds requires careful consideration. Legal guidance can help you navigate these complexities, protecting your eligibility for government assistance. Before making any decisions, especially those involving asset transfers, consult with legal experts to ensure your actions align with your long-term goals.