Denied a Funeral Grant by Work and Income NZ? The Asset Test Explained

Every year, New Zealand families applying for the Work and Income Funeral Grant get declined — not because they have money, but because a confusing legal test designed to catch hidden wealth ends up catching people who have very little. If your grant application was declined, or if you are preparing to apply and worried about being turned down, the asset test is probably the thing you need to understand most urgently.

The maximum Funeral Grant from Work and Income is $2,697.43. It does not go directly to you — it is paid to the funeral director to cover unpaid costs. But first, you must pass both an income test and an asset test that are far stricter than most people expect.

What is the Work and Income asset test?

Work and Income operates under the Social Security Act 2018. When assessing applications for the Funeral Grant, they apply the cash asset limits set out in Schedule 5 of that Act. The term "cash assets" sounds like it means bank savings, but the legal definition is broader and catches many people by surprise.

Under Schedule 5, the following count as cash assets:

• Bank account balances (savings, cheque, term deposits)
• KiwiSaver balances (the deceased's and in some cases the applicant's)
• Shares and managed fund holdings
• Life insurance policies with a cash surrender value (even if not yet paid out)
• Accounts receivable (money owed to the deceased's estate)

The following are generally not counted as cash assets:

• The family home (the principal residence)
• A personal motor vehicle
• Household furniture and personal property
• Prepaid funeral expenses already contracted before the death

For a couple, the cash asset limit is approximately $2,351.46. For a single person, it is lower. If the combined cash assets of the deceased's estate and the applicant exceed these thresholds, the grant is declined.

Why applications get denied — the most common pitfalls

KiwiSaver is counted as an asset before it is released. Many families assume KiwiSaver funds are "locked up" and therefore do not count. Work and Income counts the estimated KiwiSaver balance as a cash asset of the estate, even if the funds have not yet been released. If the deceased had $15,000 in KiwiSaver, that pushes you over the limit on its own.

Small life insurance policies disqualify applicants. A $10,000 term life insurance policy — intended by the deceased to cover funeral costs — actually disqualifies the family from the Work and Income grant, because the policy proceeds are counted as a cash asset.

Funeral directors say to pay upfront. Work and Income guidelines state the Funeral Grant is for estates that genuinely cannot pay. If you pay the funeral bill from personal savings and then apply for a grant as a reimbursement, Work and Income will almost certainly decline — the grant is not a refund mechanism. Do not pay the funeral director from personal funds if you intend to apply for the grant.

The timing of the application matters. If the estate assets change between death and the application date (for example, if KiwiSaver funds are released and deposited into a bank account), Work and Income assesses the assets as they appear on the application date. This can create a situation where assets above the threshold have been partially spent on other bills, but the application still fails.

What "extreme financial hardship" actually means

The Funeral Grant is described by Work and Income as being available to those in "extreme financial hardship." In practice, this means passing the asset test above. The concept of hardship is not assessed by asking whether the funeral costs are burdensome — it is assessed by measuring whether cash assets breach the Schedule 5 limits.

If you have $2,400 in savings and the limit is $2,351, you are over the threshold even if you have no other assets and no income. This is the central frustration survivors report with the system.

How to appeal a declined decision

If Work and Income declines your Funeral Grant application, you have the right to a formal Review of Decision. You must request this review within 3 months of the original decision letter.

To request a review:

1. Contact the Work and Income office that handled your application and say you want a Review of Decision.
2. You can also lodge the request in writing — address it to the District Manager and explain why you believe the decision was wrong.
3. If you believe Work and Income miscalculated your assets — for example, by counting assets that are legally exempt or by applying the wrong asset threshold — state this explicitly in the review request.

If the Review of Decision goes against you, you can escalate to the Social Security Appeal Authority, which is an independent tribunal that hears appeals against Work and Income decisions. You do not need a lawyer to appear before the Authority, but engaging a community law centre or a Citizens Advice Bureau representative can improve your chances significantly.

What to do if the Funeral Grant is not an option

If you do not qualify for the Work and Income Funeral Grant, there are other sources of funding to consider:

If the death was accidental: The ACC Funeral Grant (up to $7,990.30) is not income-tested or asset-tested. Any family where the death resulted from a motor vehicle accident, workplace accident, or medical misadventure should apply to ACC, not Work and Income. ACC's grant is more than twice the WINZ amount and has no cash asset threshold.

Veterans' families: The Veterans' Affairs funeral grant is substantially larger and subject to different eligibility rules.

Community assistance: Citizens Advice Bureau, community law centres, and local iwi social services can sometimes assist families with bridging loans or emergency grants for tangihanga expenses.

Negotiate with the funeral director: Many funeral directors are willing to accept partial payment, deferred payment, or payment plans, especially if they know estate administration is underway and funds will be available once KiwiSaver or a life insurance policy is released.

Understanding exactly how the asset test applies to your situation — before your application, not after a denial — is the surest way to avoid wasted time and unnecessary distress. The New Zealand Survivor Benefits Navigator includes a plain-English breakdown of the Schedule 5 rules, the key exemptions, and a checklist for preparing your application in the right order to maximize your chances of approval.

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