The availability of rest-home subsidies or geriatric hospital subsidies (formally called the Residential Care Subsidy) has always depended on asset testing.

• For a single person to qualify for a Residential Care Subsidy, his or her total assets must be $180,000 or less.
  
• For a person whose partner is also in long-term residential care, the threshold is the same – total assets of $180,000 or less.
  
• For a person whose partner is not in care, there is a choice of two options to establish the threshold:
  Either, $85,000 not including the value of their house* and car.
  Or, $180,000 including the value of their house and car.
  

  *The house is only exempt from the means test if it is the permanent residence of the other partner or of a dependant child.

The New Zealand Government revised the criteria for Asset Testing for Rest Home Subsidies back in 2005, from July 1, 2005, to be exact. The revision included provision to increase the thresholds by $10,000 each year. Thus, from July 1, 2008 until June 30, 2009, the threshold figures stand at $180,000 and $85,000.

AND SO ON……That is the Government plan, but we are all aware of how government thinking can change! And 2008 is election Year!
However, even after the changes that came into force on July 1, 2005, the Government allows a person to have up to $10,000 set aside in a Funeral Trust, and that is exempt from asset testing. Also, the net income earned from a Funeral Trust account is exempted, provided the Trust does not exceed $10,000 in value. The only other assets with a similar exemption are personal items like jewellery and clothing.

There is still a clear $10,000 advantage in being able to utilise this Funeral Trust exemption. Otherwise, your funeral expenses simply come out of your residual assets upon your death. Your heirs will receive $10,000 less – it's as simple as that!

See our simple case studies: (these are slightly out of date, but will help exlain the concept)
Single Person
Married Couple

This information is provided by Pre-Paid Funerals, a Wellington-based organisation specialising in setting up and managing Funeral Trusts independently of any funeral director.
If you would like to know more about this fast-growing concept, please visit the home page of Pre-paid Funerals. Take the links below.