If your capital is below this threshold, it will be fully disregarded from any financial means test and therefore the local authority will generally provide financial assistance towards your care home fees, considering any income you receive day-to-day e.g. from your state and private pensions.
When the average annual cost of residential care in Wales is over £60,000 and the average annual cost of nursing care is over £72,000 , it is not surprising that we are commonly asked by clients whether they can pass on savings and assets to family members during their lifetime to try and avoid such fees.
What Is Deliberate Deprivation of Assets?
A deliberate deprivation of assets is the term used to describe the act of reducing your assets intentionally so that they will not be included in any financial assessment for care home fees. If the local authority deems this to be the case, they may decide to calculate your care fees as if you still owned assets that you have otherwise chosen to dispose of. A deliberate deprivation of assets can also affect your eligibility for any means tested benefits you receive such as Pension Credit.
What Counts as Deliberate Deprivation?
It is not just the gift of a property that the local authority sees as a deliberate deprivation. There are many types of disposals that could be seen to be a deliberate deprivation of your assets, including giving away your property, putting assets into trust, making large lump-sum gifts, extravagant out of character spending and varying an inheritance through a Deed of Variation.
It is important to note that there is no given timescale when it comes to deprivation of assets. It is a common misconception that the local authority is only able to look at a disposal of assets made within the last 7 years. This is not the case. The ‘7-year rule’ relates to inheritance tax gifting rules and does not apply here.
It is also important to note that when you are acting as an attorney or deputy under a Lasting Power of Attorney or Deputyship Order, you are unlikely to have authority to make gifts without authority from the Court of Protection. Therefore, if you are acting on behalf of someone else, there could be further consequences if disposals are made to avoid care fees.
How Local Authorities Assess Deliberate Deprivation?
When ruling someone has made a deliberate deprivation of assets, the local authority must show that the person requiring care knew that they may need care and support in the future when the deprivation took place. To do this, the local authority undertakes an evidence-based test of foreseeability and intention. The local authority must look at each case independently and consider why and when assets were disposed of, whether you could have known you would need care and support, whether at the time of the disposal you could have known that you would have contributed financially towards your care costs and what your motivations were for the disposal of assets.
It is crucial to seek advice as early as possible to ensure that you are aware of all the financial options available to you and to be proactive at a time when disposals are more likely to not be challenged.
How We Can Help
Our private client department can provide expert advice on all aspects of estate and planning.
Get in touch with our professional team of solicitors today to find out how we can help you.
