We are in our mid-fifties and considering transferring our house into a family trust. The main reason is so its value isn’t taken into account, should we be means-tested for free-aged care in years to come. Are people still doing this, or has the “loophole” been closed?
Is it already too late at our age to start transferring home ownership into a family trust?
Firstly, it’s not too late for you to start transferring ownership of your home into a family trust. It used to be that you couldn’t transfer more than $27,000 of equity in your home into a family trust in any one year. That doesn’t apply any more. My understanding is you can now transfer all your equity in your house to the trust straight away if you want to.
But you would be ill-advised to move your house into a family trust, purely in the hope of it not being included in any means-testing for free- aged care. I don’t think you’d get away with it now. I know that lots of switched on homeowners talked of this as a loophole in the past, but the IRD isn’t naive. And I believe there’s not much enthusiasm from lawyers and accountants to advise it, at least for the reasons you’re suggesting.
That’s not to say there aren’t many other good reasons for putting your home into a family trust. Making sure the right people benefit from its eventual sale after you die would be one of them – but every situation is different. I urge you to discussyour specific needs with a lawyer or accountant who specialises in family trusts.
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