CASE STUDY. Jack and Judy, both aged 80
Information relevant as at July 2008 and remains relevant until July 2009. |
| Week 1 |
Both move to rest home |
|
|
Assets of $220,000 (house, car, and savings) |
|
|
Govt's assessment of their assets: $220,000 |
|
|
No Residential Care Subsidy - they don't qualify ($40,000 above threshold $180,000) |
|
| Weeks 1- 25 |
Pay their own rest home fees of $1600 per week with super and out of cashed-up assets |
|
| Week 26 |
Asset level now $180,000 |
|
|
Now qualify for Residential Care Subsidy because asset level at threshold |
|
| Weeks 27 - 50 |
Along with most of their super, the Residential Care Subsidy pays their fees |
|
| Week 51 |
Jack dies |
|
|
Asset level still $180,000 |
|
|
Jack's Funeral costs $6000 |
|
|
Remaining assets $174,000. All left by Jack to Judy |
|
| Weeks 51 - 100 |
Judy's rest home fees are covered by her super and by the Residential Care Subsidy |
|
| Week 101 |
Judy dies |
|
|
Asset level still $174,000 |
|
|
Judy's funeral costs $6000 |
|
|
Remaining assets $168,000. That's how much their children inherit. |
|
| CASE STUDY. Tom and Barbara, both aged 80 |
| Week 1 |
Both move to rest home |
|
|
Assets of $220,000 (house, car, and savings including $10,000 in Funeral Trust). |
|
|
Govt's assessment of their assets: $210,000 (Funeral Trust $10,000 exempt) |
|
|
No Residential Care Subsidy - they don't qualify ($30,000 above threshold $180,000) |
|
| Weeks 1- 19 |
Pay their own rest home fees ($1600 per week) with super and out of cashed-up assets |
|
| Week 20 |
Asset level now $190,000 |
|
|
Govt's assessment of their assets: $180,000 ($10,000 in Funeral Trust exempt) |
|
|
Now qualify for Residential Care Subsidy because asset level at threshold |
|
| Weeks 20 - 50 |
Along with most of their super, the Residential Care Subsidy pays their fees |
|
| Week 51 |
Tom dies |
|
|
Asset level still $190,000 |
|
|
Tom's Funeral costs $6000 |
|
|
Remaining assets $184,000. All left by Tom to Barbara |
|
| Weeks 51 - 100 |
Barbara's rest home fees are covered by her super and by the Residential Care Subsidy |
|
| Week 101 |
Barbara dies |
|
|
Asset level still $184,000 |
|
|
Barbara's funeral costs $6000 |
|
|
Remaining assets $178,000. That's how much their children inherit. |
|
This is a very simplistic example, but it illustrates the point that the estate of Tom and Barbara is ultimately $10,000 better off compared to Jack and Judy's. This is by virtue of the fact that $10,000 of their assets were in a funeral trust. After Barbara's estate was wound up, their two children were better off by $5000 each.
In fact, the final value of their estate is more than $10,000 better than Jack and Judy's because they had $10,000 more earning investment returns from Week 20 to 101. The regulations allow much of their investment earnings to be retained.
We welcome other case studies to publish on this website. If you have one you'd like to share, please lay out in a similar fashion to the above and e-mail to phil@cfsl.co.nz
Figures used in this case study:
Rest home fees $1600 per week for a couple.
A couple's government superannuation $383 per week |
