The abolishment of gift duty in October last year has changed the nature of asset and estate planning by making it possible to gift unlimited amounts directly to a trust in one transaction. There are however, certain consequences that donors (people making a gift) need to be mindful of when considering the amounts they wish to gift. Some of these are discussed below. RESIDENTIAL CARE SUBSIDY ENTITLEMENT Despite the changes to gift duty, the eligibility requirements for a residential care subsidy have remained the same. One of the eligibility tests for a means assessment is that the donors do not deprive themselves of assets for the purposes of qualifying for a residential subsidy. Deprivation of property includes:  gifts in excess of $6,000 per year in the five year period prior to applying for a residential care subsidy, and  gifting that exceeds $27,000 in any 12 month period prior to the five year period. If you wish to avoid jeopardising your eligibility for a residential care subsidy, the amount gifted per year will need to be calculated carefully. SOLVENCY AND CREDITOR PROTECTION The ability to gift unlimited amounts at any time provides donors with a greater degree of creditor protection than before. However, donors should be aware that any gifts that are made with the intention to defeat creditors can be set aside at any time under the Property Law Act 2007. Assessing the solvency of a donor at the time of gifting is also important in the event of a donor becoming bankrupt. Under the Insolvency Act 2006, a gift may be cancelled if it was made within the two years immediately prior to the donor‟s bankruptcy (Section 204). If a bankrupt donor is unable to pay their debts, any gifts made between two and five years immediately before bankruptcy may also be cancelled (Section 205). A donor wishing to preserve their entitlement for a residential care subsidy who also desires to protect their assets faces a tricky conundrum. Gifting large amounts/assets to a trust may jeopardise a donor‟s entitlement for a residential care subsidy. Certain balances must therefore be struck to achieve the intended outcome. ACCESS TO TRUST ASSETS Under the previous gifting regime, transferring an asset to a Trust usually created a debt which was written off over a period of time. The debt was an asset of the transferor, and could be called upon at any time by the donor if they needed access to funds. Gifting an asset in its entirety on the other hand has the effect of a donor relinquishing complete control over that asset. You cannot simply „unwind‟ the gift. In this regard, adhering to traditional gifting regimes and leaving a loan outstanding in relation to the asset may give some donors greater leverage and will assist in ensuring that there are monies available to the donor personally if needed. SUMMARY There are numerous other considerations that a donor should be aware of before any significant amounts are gifted. The impact of gifting on relationship property and family protection for example, are two such considerations. It may be wise to discuss your goals with a lawyer and accountant to assess how best to achieve them.