Deprivation of Assets: Understanding the Rules and Implications for Care Home Fees

What is Deprivation of Assets?

Deprivation of assets occurs when someone intentionally reduces their savings, properties, or income to avoid paying or reduce their contribution towards the cost of care home fees. Local authorities have the authority to investigate these situations and may still calculate your fees as if you still owned those assets.

Key takeaways:

• Deprivation of assets means you've deliberately reduced your assets to avoid paying care home fees. This includes giving away money or property.
• The local authority assesses your assets, like savings, property, and income, to determine how much you should pay towards your care.
• If the council thinks you've intentionally reduced your overall assets, they can still consider the value of those assets when calculating your contribution towards care costs.
• Understanding what counts as deliberate deprivation can help you make informed decisions about your finances and future care needs.

Navigating the financial aspects of care and support can be overwhelming, especially when faced with the complex concept of deliberate deprivation of assets. This guide aims to provide clarity on what constitutes deprivation of assets, how local authorities make decisions, and what you need to know to avoid complications with your care funding.

How is Deliberate Deprivation of Assets Defined?

Deliberate deprivation of assets occurs when you intentionally dispose of assets to avoid them being taken into account in a financial assessment for care. The council must consider the timing and motivation behind any transfer or reduction of assets.

Examples of what might be considered deliberate deprivation:

• Giving large sums of money to family members shortly before or after a care needs assessment
• Transferring ownership of your home to a relative when you might need care
• Spending unusual amounts of money in ways that are out of character
• Making investments specifically to reduce your capital below assessment thresholds
• Converting assets into items excluded from the financial assessment

When determining if deprivation has occurred, the local council will look at:

1. Whether avoiding care costs was a significant motivation
2. The timing of the disposal in relation to your health at the time
3. Whether you could reasonably have foreseen that you would need care and support
4. The amount of assets transferred or reduced

How Does the Local Authority Decide?

When a local authority suspects deliberate deprivation of assets, they conduct a thorough investigation. There is no time limit for how far back they can look at your assets, though transfers made many years before needing care are less likely to be considered as deliberate deprivation.

The decision-making process typically involves:

• Reviewing financial records and transactions
• Considering your health status at the time assets were disposed of
• Examining the reasons given for transferring or spending assets
• Assessing whether you would have anticipated needing care services

If the council decides that you have deliberately deprived yourself of assets to avoid paying care home fees, they can treat you as still owning the assets for the purposes of the means test. This is known as "notional capital" or "notional income."

What Doesn't Count as Deliberate Deprivation?

Not all instances of reducing assets are seen as a deliberate deprivation. The local authority recognises that people manage their finances for various legitimate reasons.

Actions generally not considered as a deliberate deprivation include:

• Regular gifts for birthdays, Christmas or other celebrations (within reasonable limits)
• Charitable donations consistent with your giving history
• Paying off debts
• Spending money on home improvements before you might need care
• Normal living expenses and lifestyle choices
• Financial decisions made when you were in good health with no foreseeable care needs

The Financial Assessment Process

When you need care and support, the local authority will conduct a financial assessment to determine how much you need to pay for care. This assessment looks at:

• Your income (pensions, benefits, earnings)
• Capital (savings, investments, property)
• Personal possessions (in some circumstances)

Currently, if your capital exceeds £23,250 (in England), you'll be expected to pay the full cost of your care. Between £14,250 and £23,250, you'll contribute from your capital and income. Below £14,250, only your income is considered.

If the council concludes that you have deliberately given away assets to avoid paying care home fees, they can calculate your contribution as if you still owned the assets.

Common Scenarios and Questions

Moving into a Care Home: What Happens to My Property?

When you move into a care home, your property may be included in the financial assessment unless:

• Your spouse/partner still lives there
• A relative aged 60 or over lives there
• A relative under 16 whom you maintain lives there
• A disabled relative lives there

Many people mistakenly believe that transferring their home to their children will protect it from being used to pay for care. However, if this is done with the intention to avoid care costs, it could be considered deliberate deprivation of assets.

What If I've Already Given Away Assets?

If you've already reduced your overall assets and later need to pay for care, the local council may:

1. Charge you as if you still owned the assets
2. Attempt to recover the assets or their value from the person who received them
3. In some cases, pursue legal action if there's evidence of deliberate avoidance

Can I Give Gifts to Family Members?

You're entitled to be generous to family and friends. However, if gifts are unusually large or made around the time you might need care, they could be scrutinised. Normal patterns of giving are generally accepted, but sudden changes in financial behaviour raise questions.

Seeking Legal Advice

Given the complexity of care funding and the potential consequences of deprivation of assets, it's advisable to consult a solicitor specialising in social care funding before making significant financial decisions.

A solicitor can help you:

• Understand how assets might be assessed
• Make legitimate plans for managing your finances
• Create appropriate documentation about the purpose of any gifts or transfers
• Navigate the complaints process if you disagree with a local authority's decision

Planning Ahead Responsibly

Rather than seeking ways to avoid paying care home fees, consider these responsible approaches:

1. Explore care options early - Understanding the range of services available can help you plan financially
2. Consider care insurance products - Some financial products are designed to help cover future care costs
3. Discuss wishes with family - Open conversations about care preferences and financial considerations can prevent misunderstandings
4. Keep good records - Document the reasons for financial decisions, especially significant gifts or transfers
5. Seek professional advice - Financial advisers specialising in later life can provide tailored guidance

Frequently Asked Questions About Deprivation of Assets

Is there a time limit for the council to investigate asset transfers?

There is no specific time limit for how far back a local authority can look. However, the further back the transfer occurred, the harder it may be to establish that avoiding care costs was a motivation, especially if you were in good health at the time of the gift.

What happens if the council decides I've deliberately reduced my assets?

If the council decides you've deliberately deprived yourself of assets, they can:

• Treat you as still having the asset (notional capital)
• Calculate your contribution towards the cost of care accordingly
• Potentially seek to recover the asset or its value from the person who received it

Can I spend my money on whatever I want before needing care?

Yes, you're entitled to spend your money as you wish. However, if the council believes you've deliberately spent large sums specifically to avoid these assets being used towards paying for your care, they may still count this spending as notional capital.

Does giving my house to my children protect it from care fees?

No, transferring your home to your children with the intention to avoid care costs could be considered deliberate deprivation of assets. If the local authority determines this was your motivation, they may still include the value of your home when assessing your ability to pay for care.

Need Help Understanding Care Options?

At Ashberry Care Homes, we understand that navigating care decisions can be complex. Our team is here to provide information about our care services and help you understand the options available across our locations.

While we can't provide financial or legal advice, we can direct you to appropriate resources and support services to help you make informed decisions about care funding.

Get In Touch

If you have questions about our care homes or would like to discuss care options for yourself or a loved one, please contact us.

Our team is committed to providing compassionate, high-quality care focused on dignity and independence, while helping families understand the practical aspects of accessing care.