We are often approached by clients worried about having to pay for the cost of future care and how this may impact upon the assets which they wish to pass on to future generations.
When planning for the future there may be a temptation to simply give away assets of significant value such as houses, cars, jewellery etc in order to avoid having these assets taken into account if you need to pay for future care costs. This is not a decision which should be taken lightly (especially if this involves a transfer of ownership of your own home), and legal advice should ideally be sought as there can be many downsides which you have not considered.
Of particular concern is that a decision to give away significant assets can result in a future allegation by your local authority that you have deliberately deprived yourself of assets in order to obtain funding for your care needs. This is a growing occurrence as cash-strapped local authorities struggle to fund the cost of care for a growing elderly population. Allegations of deprivation by councils used to be rare, however they are taking a much harsher line these days which is aided by very loosely worded regulations and guidance.
In essence if a local authority believes that someone has intentionally reduced their assets (property, cash, possessions etc) with a significant intention to avoid these being included in a financial assessment for care home fees, then the local authority can assess them on the basis that they still own these assets.
A couple of recent decisions by the Ombudsman have shown how willing local authorities are to make allegations of deprivation against people who have made decisions to pass on money and assets to their children.
The South Gloucestershire Decision
A very recent decision concerned South Gloucestershire Council treating an elderly couple who gave money to their daughter to buy a house as having deliberately deprived themselves of this money in order to avoid paying for their care needs.
The background to the case was that the couple had four children and had previously helped three children onto the property ladder with cash gifts. Their daughter had been in employment tied accommodation and was buying her first property decades after her siblings. Her parent’s intention was to be fair to her and provide her with the same assistance as they had with their other children, however by this time the husband had some significant health conditions and was likely to need care. The council found out about the cash gift and immediately treated this as a deprivation and stated that the husband was not entitled to financial assistance.
The Local Government & Social Care Ombudsman found that the Council had not followed a suitable decision making process and had not given the wife the opportunity to provide evidence to counter their allegations, and had not provided a sufficient explanation of its reasons for deciding a deprivation had occurred.
The North Yorkshire Decision
An earlier decision in January 2018 involving North Yorkshire Council also criticised a finding that an elderly lady had deprived herself of capital when making gifts to her children over a number of years whilst she was in a care home.
The background to this complaint was that the lady had entered care in 2007 when she was 80 after a stroke. She paid the full cost of her care for 9 years until her capital reduced to levels where she could ask the council to assist with the funding of her care. The council then became aware that the lady had given cash gifts to her family whilst she had been in care and immediately decided that this was a deprivation. The gifts which had been given had followed a pattern of giving to family members which pre-dated the lady’s entry into care and which amounted to around 30% of the money which she had when she sold her home in 2007. She had spent the remaining 70% on her care fees.
The Ombudsman took the view that there was no evidence that the lady had made the gifts with the significant intention of avoiding paying for care, as she had been self-funding her care for many years and no-one could have predicted that she would have needed to pay for care for so long. At the time of making the gifts the lady had believed these to be entirely affordable.
Statutory Guidance on care funding clearly states that people should be treated with dignity and respect and are free to spend their income and assets as they see fit, including making gifts to friends and family. It is clearly the case that Local Authorities should not simply assume that a gift is a deprivation. There may be valid reasons why someone no longer has an asset and a local authority should ensure it fully explores the circumstances before making hasty conclusions.
However the risk that there will be an attempt to treat a gift as a deprivation becomes increasingly likely as a person becomes older, and is almost inevitable once a person does have care needs.
Accordingly, if you are considering making a sizeable gift or transfer of ownership please do consider obtaining legal advice so that you can make an informed decision on the best way forward.
Please contact us on 0161 926 5533 for a further conversation to see whether we can offer assistance.