Paying for care home costs can be a real concern as we get older and become more incapacitated, especially when we would like our children to inherit or benefit from the sale of the family home after we are gone. So naturally, many of us look to ways in which we can mitigate our liability to pay for any care.
However, when means testing what money a person has – so as to assess the extent of his or her own liability to contribute towards these care costs – the local authority may treat any property and savings that have been gifted or transferred to someone else as a ‘deliberate deprivation of assets’.
What is a deliberate deprivation of assets?
In circumstances where a person requires permanent residential care, the local authority will carry out an assessment of their means, including any savings or property, to determine whether or not they are eligible for financial assistance. Generally speaking, the local authority will help to pay for care costs if a person is assessed as having capital of less than £23,250.
When undertaking this means test, the local authority will not only look to any existing property that a person owns, but also any property they have previously owned, especially where there is a possibility that this has either been gifted, transferred into a trust or sold at a knockdown price to their adult children.
In this way, the local authority will seek to establish if someone has disposed of any savings or property to purposely bring them below the means test threshold.
How will deliberate deprivation be decided?
In the local authority’s decision-making process, much will depend on the timing of any disposal of savings or property prior to being means tested, where a gift or transfer will not usually be seen as a deliberate deprivation of assets if:
A person is fit and healthy at the time of the disposal
Had no reasonable expectation of the need for residential care, and
Had a legitimate reason or transferring the asset(s) to someone else.
If, on the other hand, these requirements are not met, the local authority is likely to suspect, and ultimately decide, that the avoidance of care costs was the motivation behind making any gift or otherwise disposing of the property.
It is worth noting that even if you gave away any savings or property a long time ago, it is still possible that the local authority could make a finding of deliberate deprivation if it is clear that the main reason for you reducing your assets was the avoidance of care home costs in the future.
What will a finding of deliberate deprivation mean?
If the local authority decides to treat any disposal of savings or property as a deliberate deprivation of assets, your care home costs may be calculated as if you still owned the assets in question, notwithstanding that you have lost the benefit of being able to utilise these. This could leave you with a very limited choice of affordable care homes available to you when the time comes.
As such, given the risk of being found by the local authority to have intentionally reduced your assets when assessing your eligibility for financial assistance, and being left without the necessary funds to ensure a decent quality of life, expert advice should always be sought prior to making such a gift.
Legal disclaimer
The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law and should not be treated as such.
Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
