What is deliberate deprivation of assets concerning care home fees?

By Rachel Efetha, Chartered Financial Planner.

 

When you go into a care home or nursing home, the local authority will carry out a financial assessment to see how much you should contribute towards the costs of your care.

Under current rules for England and Northern Ireland, most of your income is taken into account and all of your capital if it is over £23,250 If you have between £14,250 and £23,250 then a contribution of £1 per £250 of assets above £14,250 is expected.  Scotland and Wales have different limits.

So, what is deliberate deprivation?

This means that you have intentionally given away money, assets, property or income, or have been unusually extravagant in your spending, or gambled the money away to avoid paying for care home fees.

The onus is on the Local Authority to prove this and they look at two things – you must have known at the time that you needed or will need care – the significant reason for giving away money/ assets etc. was to avoid paying for care.  The guidance in the Care Act 2014 says that deliberate deprivation should not be automatically assumed as “there may be valid reasons why someone no longer has an asset and the local authority should ensure it fully explores this first”.

How is this assessed?

The problem is that the wording is quite woolly and different local authorities will act differently from each other so there is no certainty whether something will or won’t be counted.

If the local authority decides that deliberate deprivation has occurred, they will still include the notional value of the asset in their financial assessment.  For instance, if you had £28,250 in your bank account and gave away £5,000 the day before going into a care home to bring your assets down to the upper level of £23,250, then they would expect you to pay the first £5,000 of fees, bringing your actual cash down to £18,250.  They would then assess the £1 per £250 contribution on the full £23,250, even though you only have £18,250.  If the figures are larger, for instance, you gave away £100,000 to bring you down to £23,250, then the local authority they may seek to recover the extra costs from the third party you gave the money away to.

Is there an Ombudsman to help?

If you have been found to have deliberately deprived yourself of assets then you can challenge the Local Authorities’ decision.  If you are not satisfied with the outcome you can take it to the local government and social care ombudsman.

One thing that often confuses clients – is the seven-year rule on gifting assets relates to Inheritance Tax – not care costs.  There are no timelines and the Local Authority can go back as far as they like, as long as they can prove intention and foreseeability.

How Anstee & Co can help you avoid deliberate deprivation.

If you would like help with long-term care planning we have a dedicate team that can help. At Anstee & Co we are independent financial advisers (IFA’s). This means that we offer unbiased advice. We will look at all the financial options. Some financial advisers only operate from a limited panel or only sell their products and services. Why not arrange a meeting with us today? The initial “getting to know you” meeting is at our expense and is without obligations. The idea behind the meeting is to see how we work and how we can help you. It is about building relationships.

Our expertise covers all aspects of financial planning including long-term care, pensions, investments, and mortgages.

If you have any thoughts or comments on this article, “What is deliberate deprivation of assets concerning care home fees?”, then it would be great to hear your views.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).