Life interest as an asset or income stream

A client's life interest may include a right to get income from a deceased persons estate for their lifetime.

If the estate's administrators honour the client's right to income from the estate, instead of purchasing the life interest from the client, then the income is included in the client's financial means assessment.

In this situation an income stream from a life interest is confirmed and the estate administrators are not going to purchase the life interest. The income from the life interest is included in the client's financial means assessment. The life interest is not considered to be realisable and is not included as an asset in the financial means assessment.

In some cases a life interest may give an income and also be a realisable asset. The Ministry will consider these on a case by case basis.

If the estate purchases the client's life interest and pays the client a lump sum in exchange, the lump sum payment is an asset and is included in the financial means assessment of assets. The payment needs to be of fair value otherwise deprivation may need to be considered.

If the type of life interest is unclear, contact Legal Services for advice.