Residential Care 

My mum has Alzheimer’s. She has $400,000 in assets but no trust. Are there options to avoid having to sell up her assets to pay for her care?

If your mother requires long term care in a rest home or hospital (following assessment by the Needs Assessment Service Coordination agency in your area), she may be eligible for the Residential Care Subsidy, which is paid directly to the rest home or hospital by the Ministry of Health.

Work and Income will look at your mother’s assets to see if she qualifies for the Subsidy. If the value of her assets are above the threshold she will not be eligible for the Subsidy and will be liable for the cost of her care (up to a maximum set by your local District Health Board). Some of the assets that may be included in the means assessment (asset test) are: any property she owns; cash and investments; loans made to other people.  

Your mother could "gift" some of her assets to family members (or other individuals or organisations) to reduce the total value of her assets so that it is under the threshold. 

Assets gifted more than five years prior to applying for the Subsidy will generally not be counted in the means assessment, while only $5000 per year of gifts made within the five years prior to the application is allowable (is not counted in the means assessment). For this reason, if your mother is considering reducing her assets in this way she should begin the process as soon as possible. You can talk to your lawyer or visit your local Community Law Centre for help with this.

More details about gifting in relation to the Residental Care Subsidy are on the Work and Income website.

Even if your mother does not qualify for the subsidy, she may not have to sell her home to pay for the cost of her care either. She may be eligible for the Residential Care Loan  (also through Work and Income). This is an interest-free loan that can be paid back when the home is sold, or six months after the borrower passes away, whichever happens first.

Another option if the Residential Care Loan is not available is a ‘reverse mortgage’.  This is a loan that allows the release of a portion of the value of your mother’s home.  There are no regular repayments to worry about, and the loan plus interest is typically repaid when the house is sold. 

For your mother’s situation right now, a good place to start is by contacting the Work and Income Residential Subsidy Unit on 0800 999 727 so they can take a look at her case and see how they may be able to help.