Deprivation of assets to avoid paying for care home fees

Deprivation of assets means you have deliberately reduced your overall assets to avoid paying care home fees.

Assets include the value of savings, property and income which your local authority includes in the financial assessment to determine how much you should contribute towards your social care. Some people assume as they age that if they transfer ownership of their home to their children, they are protecting their home from being used for care home fees.

However if the local authority believes you have intentionally deprived yourself of assets, such as giving away money or transferring property, they may include the value of these assets in the means test to determine your contribution towards care costs.

Care funding thresholds

Around half of the people in the UK who pay for permanent residential care or move into a nursing home receive funding from their local council. The amount of help with care costs you get from social services depends on the value of your assets. The more your assets are worth, the more you have to contribute.

Following a needs assessment, if your local council thinks that you need to move into a care home to receive the level of care required, they will conduct a financial assessment to look at your assets. This means test will show if you are eligible for financial support.

If you move into a care home permanently, your home will be included in the means test unless your partner still lives there, or a relative in some circumstances. 

The thresholds for state-funded care vary from country to country. For example, the upper limit in England is £23,250. If your assets are valued at over this amount in the means test, you will have to pay all care fees yourself. For more information on how to get help with care home fees, click here.

Paying for care home fees completely out of your own pocket is expensive. Some people have to sell their homes to afford long-term residential or nursing care. People sometimes consider reducing their assets to get below the threshold and qualify for social care funding.

What counts as deprivation of assets?

Most people will in their lifetime gift either money or assets to family members and relatives. Intention, amount and timing are central to deciding whether the transfer can be considered deliberate deprivation of assets.

During the financial assessment, the local authority will ask about property ownership and bank statements. If they show you have quickly reduced your wealth before the assessment by purchasing expensive possessions, such as jewellery, the local authority may allege deliberate deprivation of assets.

What counts as deliberate deprivation of assets?

• Gifting a lump sum of money to a family member or friend
• Transferring property into someone else’s name
• Selling a property to someone for less than it is worth
• Buying or gifting expensive items
• Suddenly spending unusually large amounts of money
• Gambling
• Putting money into a trust

There could be other legitimate reasons for the above, so the council must consider the timing and the intention of the actions. For a purchase or transfer to count as deliberate deprivation of assets, the local authority must prove that you were aware that you might need care in the near future.

7 year rule for care home fees

Many people believe there is a 7 year rule for care home fees when it comes to transferring assets. They think if you give away money or property at least 7 years before moving into a care home, it won’t be taken into consideration. But this is not the case.

There is actually no time limit to deprivation of assets so any past disposal of assets could be considered. However, the local authority must provide evidence of motive and consider if the amount made any substantial difference to the capital limit, i.e. £23,250 in England.

Intention is the most important factor to consider. When you gave away the large sum of money or transferred your property to a grandchild, was it reasonable for you to expect to need care and support?

If the local authority conducts a needs assessment and concludes that you need care and support in a residential home, it is reasonable to expect that you are aware that you need care. If you then transfer a property to a relative for a nominal fee, which would reduce your capital significantly, this could very well be grounds for deprivation of assets.

People who are found to have deprived themselves of assets, will find the value of the property will still be taken into account in the financial assessment and will be known as notional capital.

Notional capital and its consequences

If a property you used to own is deemed notional capital, the local authority can add its value to the means test, in which case you will be considered to own more assets than you actually do.

This potentially means that you could have to self-fund your permanent care home place without a house that you could have used to pay for your care. In other words, you could be told you do not qualify for any support even if you do not have enough money to pay for it.

Challenging a deprivation of assets decision

If you wish to challenge a decision made by your local authority, you should first contact them for details of their complaints procedure.

In your complaint, it is important you are as clear as possible with the reasons as to why the disposed assets had nothing to do with avoiding care costs. Include evidence and outline the motives behind the disposal of assets.

Evidence could be bank statements, or letters explaining that you promised to gift a certain sum of money to your grandchildren once they turned 18, or similar.

After you have received the response from your local authority and you still disagree with their decision, you can get a solicitor involved to pursue a legal case

If this fails, your final option is to contact the Social Care Ombudsman.