Paying for the Cost of Care
Paying for the Cost of Care and the Deliberate Deprivation of Assets
Generally speaking, any person that has capital assets over £23,250.00 will be expected to meet the costs of their own care. The exact cost of care is dependent upon the care home and its facilities but it is not uncommon to see costs ranging from £500.00 to £1,000.00 per week.
Local Authorities have a duty outlined in the Care Act 2014 to charge a resident for the costs of their care where the resident has the means to pay. This means that all of the resident’s income will be taken into account and where the income is insufficient to meet the costs, capital will also be taken into account, until the minimum limit of £23,250.00 is reached.
At that time, what’s known as ‘tariff income’ will become relevant, which states that for every £250.00 of capital a resident may have, they will need to contribute an extra £1.00 per week to the costs of their care, in addition to their income. Once the minimum level of £14,250.00 in capital is reached, the resident will still continue to have all of their income taken into account, but capital will no longer be assessed.
It is an ever-increasing concern for most people about their assets and how to protect these for their children or other relatives.
We get many people stating that they have spent years working to provide for their family and they do not want all of this taken up in care fees. We are often asked whether it is possible to transfer or give away assets (most often property) and continue to have use of the asset, such as by living in the property. Transferring an asset to say a son or daughter is in an attempt to avoid them being included in an assessment for care costs and is known as ‘deliberate deprivation of assets’ and it is something that any Local Authority is familiar with.
In order to prove that deliberate deprivation of assets has taken place, the Local Authority will need to show that avoiding the charge was a significant motivation. This can be illustrated by the timing of the transfer and whether the resident had, at the time, a reasonable expectation that they may require Local Authority assistance to meet care costs in the future. If the Local Authority can prove that a resident has deliberately deprived themselves of an asset to avoid care home fees, under such circumstances they are able to take the following action:
- Treat the resident as still retaining the asset that has been given away
- Recover the value of the asset from the person receiving the transfer
- Initiate proceedings to declare the resident bankrupt, which can mean that any transactions can be set aside
Taking the above into consideration, it is not in every case that there is a deliberate deprivation of assets every time a transfer has been made. Every case must be judged on its own facts and an action that could be considered to be a deliberate deprivation in one case may not be in another. All will depend on circumstances, intention and quite importantly – timing.
FAQ’s concerning Deliberate Deprivation of Assets:
Q. If I make a transfer then after a few years the Local Authority cannot take this into account?
A. Unfortunately, there is no time scale which the Local Authority cannot look at such transfers.
Q. I have transferred my property to my son but he is letting me live there. He is going through a divorce now. What about my security in the property?
A. Dependent upon the circumstances, not only may a deliberate deprivation of assets have taken place, but if the property is considered as an asset of your son’s, your occupation may be threatened if relations with your soon to be ex daughter-in-law are not good. This is one of the main pitfalls in transferring the property to any children and should be thoroughly considered.
Q. I have transferred my property to my daughter but continue to live there but pay her rent. Does this protect me?
A. Unfortunately not. Dependent upon why you transferred the property to your daughter, the Local Authority may still deem a deliberate deprivation of assets has taken place. The payment of rent would mean nothing in relation to this and has no bearing.
Q. I have been left a big lump sum of money but I do not want this. I have been advised that that I execute a Deed of Variation
A. Unfortunately, although a Deed of Variation is a very good way of estate planning, it still could be deemed that varying an inheritance could also amount to a deliberate deprivation of assets if the Local Authority considers the intention and timing as avoiding care costs should you actually end up in care shortly afterwards!
The above is a brief summary of the issues concerning deliberate deprivation of assets and should not be relied upon solely as advice. If you require further expansion of this ever increasing issue or any other advice on Wills, trusts and Powers of Attorney, please contact our Legal Team for an appointment who will be happy to assist.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.