Can my ageing mother gift me my inheritance early? Not so fast, says legal expert

Monday, 29 June 2026

A reader asks if their elderly mother, who receives a New Zealand residential care subsidy, can gift her remaining $280,000 to her children.

Legal expert Theresa Donnelly warns that strict gifting limits ($8,000 annually) apply, and giving away assets counts as 'deprivation' of income by MSD.

The mother must retain her funds to pay for potentially expensive residential care 'premium charges' rather than funding her children's lifestyles.

Retirement questions Answered: from time to time, we will pick a question sent in by a reader and offer a response from personal finance writer Gill South. You can submit questions below.

We’ve been getting a few questions lately from readers who have certain, shall we say, plans for the inheritance from their parents, before they take their leave (so many euphemisms for death). Particularly from those who have elderly parents in residential care. They start to harbour quite specific plans for Mum’s wee nest egg.

I received quite a creative question from a reader, Patricia* who stressed that her mother (Carol*) would derive some joy from seeing her adult children spend her money.

Patricia* asked: 'Mum went into a rest home two years ago and was self-funded. She recently got a partial subsidy as she still has two private pensions.

She is well below the threshold and the private pensions are not enough to ever push her back over it. Am I right that the $280,000 she has is hers to do what she wants with? She would like to gift it to us three kids so that she can see what we spend it on and see the fun we get out of it. Gardening, travel, family and so on. Is there a limit as to how much she can gift? I am happy to inform Ministry of Social Development (MSD) if that is a requirement. I am her EPOA (enduring power of attorney) and the only one of her kids living in NZ.'

Well. I went to a pro on this subject, Theresa Donnelly, who is head of legal services at Perpetual Guardian, and a recognised elder law and trust law expert for her response. And her swift intake of air when she heard some of the assumptions Patricia was making, was very telling.

Donnelly told me she often hears comments like, “Mum wants to see the fun we get out of it” when justifying the inter-generational transfer of wealth, and she isn’t fooled.

The bad news, Patricia, is there’s no such thing as an early inheritance in terms of Residential Care Subsidy (RCS) entitlements, Donnelly says.

Carol is limited as to how much she can gift when she is in long-term rest home care.

You remember, it’s $8000 per applicant per year within the five years immediately prior to the residential care subsidy application, including gifts in recognition of care to a total of $37,500, and then $27,000 per applicant in the preceding years.

“So in 2026, Carol can only contribute $2,667 to each of her children towards their dreams of landscapes, European holidays and family visits,” she tells me. I think Donnelly is being a bit snarky there, but I like it.

On the, “surely it’s Mum’s money” argument, Donnelly points out, it is expected that people will contribute to their costs of long-term rest home care, even if they get the residential care subsidy.

While Carol qualifies on the basis of assets for the residential care subsidy, she’s not free to do what she wants with her remaining assets. These assets still need to generate income for her, Donnelly tells me. The MSD will do an income review at application and annually every year after, plus if there is a change of circumstances.

Because Carol has some pensions on top of NZ Super, half of those will be counted as income, says Donnelly.

Any income Carol “deprives” herself of is also counted, says Donnelly, who explains that giving away assets that would otherwise generate income is prima facie (at first blush) deprivation.

Donnelly says deprivation is purely a social security concept. It’s where someone, as a result of their action or inaction, no longer has access to a resource, whether it’s an asset or income.

Donnelly gives some examples of what MSD is probably going to consider deprivation which I find fascinating.

It might be:

• A loan that looks like a gift (#bankofmumanddad)

• Commercial borrowing to support a son or daughter’s business

• Paying for family to go with them on a world trip

• Exchanging the Toyota for a Porsche

• Allowing son or granddaughter to live in a property rent-free or close to

• Paying children their inheritance early because Carol “doesn’t need it and wants to see them enjoy it.”

Carol needs to retain as much of the remaining funds the Government has legislated for her to retain (her nest egg) as she may well have extra “premium charges” to pay in residential care that won’t be covered by the state, says the Perpetual Guardian legal lead.

These “premium services” might include some pretty basic “fixed” extras in a residential care home – like carpet, a window, an ensuite, a garden or a view, says Donnelly. A window? Jeez. I hope you’re telling Carol to knock herself out, Patricia.

Donnelly points out there’s no government oversight of these so-called premium offerings – not a surprise then that there is a Ministerial Advisory Group reviewing aged care sector funding at the moment – and families can be asked to pay an additional $50 to $595 per week for these. Sounds like Carol might need all the money she can get squirrelled away.

So I would make your own arrangements for landscaping, travel, and family adventures , Patricia for the foreseeable. It may actually be that you end up having to supplement Carol’s expenses in the future, from what Donnelly says.

Residential care settings are a complex legal and policy space, says the legal lead, and recommends families with elderly parents seek specific advice on the residential care subsidy so they understand what they are getting into with gifts, loans and other property arrangements with family.

All the best Patricia. I know a landscaping company who won’t break the bank if that helps.

Gill South is a freelance business writer who has authored a book on personal finance and written for many major publications in New Zealand.

*Disclaimer: The information in this article is of a general nature and is not intended to be personalised financial advice. The name of the individual in this story has been changed to protect their privacy.