When one partner needs residential care, the financial impact can affect both people. This often comes as a surprise. Many couples think of certain assets as belonging to one person only, especially KiwiSaver, savings, inheritances, or property owned before the relationship.
For Residential Care Subsidy purposes, the position can be broader. The legislation says that assets can include the assets of the person being assessed and their spouse or partner, if those assets are capable of being realised.
This does not mean every asset will always be counted. It does mean couples should be careful about assuming that “my asset” and “your asset” will always be treated separately.
The family home is usually the first concern. If one partner goes into care and the other partner remains living in the family home, the applicant can choose between two asset thresholds. They can use the lower threshold and exclude the family home and car, or use the higher threshold and include them.
This can protect the partner who remains living at home, but the details matter. The home must be the main place where the partner or dependent child lives. The way the home is owned may also affect the wider estate plan.
KiwiSaver also needs careful thought. In practical terms, once KiwiSaver has been withdrawn, or is available to be withdrawn, it may be treated differently from locked-in funds.
Relationship property agreements are also relevant, but they should not be misunderstood. A contracting-out agreement can be very useful for relationship property and estate planning purposes, especially in second relationships or blended families. However, couples should not assume that describing assets as separate property will automatically prevent MSD from considering them under the Residential Care Subsidy rules. The subsidy assessment has its own statutory framework.
These issues are particularly important for later-life relationships. One partner may be older. Each partner may have children from earlier relationships. Assets may have been kept separate for years. One partner may own the home, while the other contributes to living costs. If one person later enters care, the financial consequences can feel unexpected unless they have been considered in advance.
Estate planning can help, but it needs to be realistic. For example, if a couple owns their home as joint tenants, the home usually passes automatically to the survivor on the first death. That may be what the couple wants. But it may also mean the survivor later owns the entire home personally. If that survivor then enters care and no spouse, partner or dependent child remains living in the home, the home may be relevant to their asset assessment, and create unintended consequences.
By contrast, if the home is held as tenants in common, each person owns a defined share. On death, that share can pass under their Will rather than automatically to the survivor. This can be useful, but it must be paired with proper Wills and careful advice.
The goal is not to hide assets. The goal is to make sure the couple understands what they own, what happens on death or incapacity, and how residential care may affect both partners.
Residential care planning is not just about the person entering care. It is also about the financial security of the person who remains at home.
This article provides general information only and is not legal advice. Families should obtain advice specific to their circumstances.
