Court battle over the age-old assets question
At 80, Gwyneth Broadbent suffers from dementia and needs rest-home care, but how much she has to pay for it has become the subject of a legal test case.
The Court of Appeal has been told that since 1990 Broadbent and her late husband sold their family home and holiday home, within the allowable $27,000 a year limit, to family trusts.
Over time, the trusts’ debt back to the Broadbents was forgiven and by the time Gwyneth Broadbent needed longterm aged residential care her husband was long dead, and nearly $330,000 worth of assets had been gifted.
The process was done at a value and over a period so that her entitlement to a subsidy for rest-home care should not have been affected.
And that was right as far as the assets themselves went, but when she came to be assessed in late 2014 an estimate was made of a notional income she could have received from the gifted assets, had they not been gifted.
The trusts had done well, thanks in part to the property boom, and the value of the assets had significantly increased. The Ministry of Social Development said by gifting the assets she had deprived herself of about $45,000 a year income, so she had to make the maximum contribution to her care.
In a later reassessment that figure was reduced to a notional $13,000 a year income so that she still had to contribute but not so much. Son Stephen, an accountant who has been advocating for his mother, said after the court hearing, that most of the contribution had been paid from his mother’s own means, but some was not paid.
The latest published schedule of maximum weekly contributions for rest-home care came into force on July 1, and varied from $1124 in Auckland to $1033 in areas including parts of Waikato, the South Island West Coast, and parts of Southland.
District health boards paid the rest of the cost.
Broadbent, through her son, challenged the ministry’s way of using assets she no longer had to give a notional figure of income she had deprived herself of, as a basis to assess the weekly contribution to be made.
The Broadbents won at the High Court in Auckland so the ministry appealed against that decision.
In agreeing to hear the case, the Court of Appeal said the question arose in about 200 applications for rest-home subsidies a year, and affected the level of contribution for about 570 people in residential care.
At the Court of Appeal, Crown lawyer Jessica Gorman said people were expected to provide for themselves up to a certain level, if they could.
Broadbent told the court that people deserved to be able to plan their futures with certainty. His mother was being affected by decisions made 20 years ago.
A lawyer appointed to assist the court, Wendy Aldred, said that up to five years out from applying for a resthome subsidy a person was allowed to gift up to $27,000 a year, and smaller amounts in the final five years before applying.
The ministry could not take into account those allowable gifts when a person was assessed for the contribution they had to make, so it should not be able to take into account the income the assets might have made.