Retirement - Can You Protect Your Assets Against Means Testing?
The answer is frequently "yes", but often not in the way that many people think.
You will recall that trusts used to be popular to protect assets against means testing when moving into retirement care. However, this is no longer the case.
If you have an interest in a trust, you are now generally worse off from a means testing perspective. This is because an individual person or couple is entitled to fixed amounts that are exempt from means testing (e.g. up to $219,889 including the home and car for a couple), but this exemption does not apply if the assets are held in a trust.
If you have an interest in a trust, the Ministry of Health expects that the trustees will look after you. They ignore any assets that you have transferred to a trust when they review your assets, with no timeline on the date that you transferred assets.
If you are approaching retirement and have either set up or are involved in a trust, we recommend that you consider whether the trust is going to create problems for you.
So, given that trusts are no longer effective against means testing, effective planning may well require a different approach. Turner Hopkins can assist you, and you may find that an additional 30-40% of a couple's combined property value can be kept in a safe harbour against asset testing.
With the average Auckland house price now over $1,000,000, effective planning could translate into a $300,000 - $400,000 inheritance for your children over and above the amount that is exempt from means testing. If the value of your properties is more, the benefits can be significant.
For a no-frills practical review of your estate planning, please contact us...
“I have used Turner Hopkins for my legal services for over eight years. I have always found their level of service excellent and their work to a very high standard. I have used various lawyers at their firm for various businesses I have been involved with and have always had very positive experiences. I would highly recommend them.”
“Joy, we cannot thank you enough for your help with our purchase! You have been wonderful to deal with and so proactive (and patient with my numerous emails). We will be visiting NZ in April so will make sure we drop in to thank you in person.”
“I have struggled with different legal firms over the years, but over the past few years I have engaged with Turner Hopkins with various requirements from personal relating to wills, family trust, property settlements and contracts through to commercial engagements including employment advice, commercial lease agreements and general legal advice. I have engaged with a number of the people in the firm and always found them professional, punctual in their responses and very sound in the advice provided.”
“I can't speak highly enough of Jenny. She got everything done in a timely manner and when my ex-husband threw a spanner in the works at the eleventh hour she got the required documentation to his lawyers and settlement back on track.”
“To Michael Robinson – I wanted to thank you and your colleagues for many years of excellent service to the Bank. You have an outstanding business that has proved to be one of the most reliable and ethical businesses that Collections have dealt with in the almost 9 years I was with the Bank.”