IMPORTANT – Always obtain skilled professional advice regarding this topic.
Often this question is asked with the thought that residential care fees might be avoided by setting up a family trust, and a subsidy obtained, if care is needed in the future.
Family trusts set up with this purpose have been seen by many as being unfair in that those with family trusts (and potentially quite a lot of resourcing behind them) might get access to a subsidy and more modestly resourced residents might not.
Work and Income have been aware of this issue and have been carefully considering possible deprivation of assets or income for some time.
Recent changes the Trusts Act 2019, such as more stringent requirements and obligations of those involved in the affairs of the Trust, and the fact that gifts and or payments from a family trust are now to be counted as income (when undertaking a financial assessment for a residential care subsidy) mean it’s very unlikely you would be advised to set up a family trust for the purpose of avoiding residential care fees.
There may however be other benefits of you setting up of family trust, so speak to your professional advisor/s.
See Ministry of Justice information
This information is of a general nature. It is not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose. It is not an alternative to legal advice and does not replace any requirements under any relevant Act, Regulations, Code of Practice, Rule, Standards or Orders. While we have endeavoured to ensure this information is accurate and as useful as possible, we accept no responsibility, loss or liability resulting from the use of this information. We urge you to seek appropriate or professional advice on all issues such as this.
Updated: 15 Aug 2023