Trust Gifting

Historically people have gifted $27,000 each to trusts in order to avoid gift duty.

Now that gift duty is not an issue, the considerations are: 

-          You could gift everything to your trust. The advantages are that after 2 years those assets will be protected from creditors. If the trust is run carefully          it will probably protect you from relationship property claims from any future relationship. 

-          If neither of the above issues is of concern to you, you may wish to continue gifting $27,000 each year so as to remain entitled to rest home                subsidies. Regulation 9B of the Social Security (Long Term Rest Home Care) Regulations 2015 states that gifts of more than $27,000 constitute deprivation of property and income. This means that if you have gifted more than the “permissible” gift, you may be means tested as if you had not made the gift. 

The Court of Appeal case of Bridgeford v Ministry of Social Development established that the $27,000 limit is per couple, not for each individual ie $13,500 can be gifted each NOT $54,000 between them. That case related to permissible gifting for the asset test only.

My case before the High Court has established that gifts of less than $27,000 per couple are also exempt from the “Income test” ie  if a couple gifts less than $27,000 per year they have not “deprived themselves of Income”. The decision may be appealed, but for the moment the best advice is that you are able to gift $27,000 and still be entitled to rest home subsidies.

Conversely if you ever gift more than $27,000 per couple, you will not be entitled to a rest home subsidy.