Moving into a retirement village - what you need to know

Palmerston North lawyer Richard Small.

Older New Zealanders often start to look ahead to the days when they may no longer be capable of living independently, and may move into what used to be called "rest homes", and are now most commonly referred to as retirement villages or aged care facilities.

When thinking ahead to this stage of life, many clients are unsure of the process and what is required (legally speaking) to make the transition to this new way of living.

Most retirement villages now require new residents to sign an Occupation Licence or Occupation Right Agreement, which, as the name suggests, gives the person a right or licence to occupy a unit, without granting any legal estate in the unit.

That means the legal title for the unit does not get transferred into the occupant's name, but only conveys a right for the person or couple to live in the unit.

A licence fee is payable, usually with an upfront lump sum payment, and there will also usually be a weekly fee payable to cover things like food and utilities, such as electricity and gas charges.

Depending on the amount of time that the person occupies the unit, a portion of the lump sum is usually refunded once the person vacates the unit (for whatever reason).

Most Occupation Right Agreements also contain provisions to deal with the situation where residents may need more intensive medical assistance or care at some future point.

Some retirement villages have specialist medical wings, where occupants can relocate without having to move to a different retirement village.

As a condition of entering a retirement village, the resident will need to have enduring powers of attorney in place, to ensure that a family member or trusted associate is empowered to make decisions if the person becomes mentally incapable of making those decision for themselves in their time at the retirement village.

For more information about enduring powers of attorney, you can see a previous article in the Manawatū Guardian June 25 edition, or ask your lawyer.

Many people want to know whether they qualify for a Rest Home Subsidy from the Ministry of Social Development, which can be used towards the costs of aged care.

In assessing whether a person qualifies for the subsidy, the ministry will review the person's assets, together with their history of gifting.

There are limits as to how much a person can gift during their lifetime, and the limits are significantly lower in the five years immediately before an application for the subsidy is made.

- Richard Small is a senior solicitor at Jacobs Florentine. The information above is general only and cannot replace specialist advice. The writer accepts no responsibility or liability for reliance on, or use of, this article.