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As part of our service at Harris Tate, we produce a range of legal articles that are published in various media, designed to alert our clients to legal developments that may affect them.

Our legal articles are written by lawyers and legal executives and discuss legal aspects relating to industries, businesses and individuals as well as focusing on everyday legal topics of interest.  These articles provide information to help educate our clients on different topics and current events in the law.  They may raise additional questions.  Please do not hesitate to contact us with your questions or to discuss your individual situation in more detail.

Does a life interest have a value if you need residential care?

1 October 2015

What is a life interest?

Good question! Life interests are a complex puzzle – but can be very valuable when done right.

Put simply, they ensure your loved ones have security after your death, and that your assets – the results of a lifetime of hard work – end up in the right hands.

Under your Will, you can grant a right to a person to use your assets after your death – such as your home, income or household items – without giving away your assets outright.

When a life interest ends, the life interest asset returns to your estate to be passed on to a permanent recipient of your choice, such as your children.

For example, life interests are especially beneficial for two people entering into a second relationship where each person wants to protect their interest in a home for their separate children. A life interest enables the surviving partner to live in the home until a specified event occurs – such as after a number of years have passed or the survivor enters a new relationship.

When applying for a residential care subsidy, a life interest is valued by the Ministry of Social Development based on a person’s age, the likely ‘life’ left in the life interest and the value of the life interest asset.

Close scrutiny is paid to when a life interest ends and on what terms. It is possible that a life interest could be deemed to continue even when it does not, resulting in the surviving partner being required to pay for his/her care with money he/she doesn’t have. 

Sound legal advice is critical to ensure that your life interest works as it should.

- Jess Holtom