Care Home Fees and Deprivation of Assets
When a person goes into care, the local authority will consider the assets which a person holds to calculate the contribution which should be paid by that individual.
Quite often we are approached by clients seeking to avoid care home fees by either gifting assets or putting them into a trust, as a pre-emptive measure, however this is not a simple as it sounds.
Clients are often shocked to learn that whilst gifting for Inheritance Tax planning purposes, a gift falls out of consideration after a period of seven years, that this is not the case with care home fee assessments.
Local authorities can look back indefinitely at a person’s financial transactions and if they deem that a gift or trust has been made solely with the intention of reducing the value of their estate they may deem this to be deprivation of assets.
Deprivation of assets is the action of deliberately removing assets from an estate with a view to avoiding paying care home fees.
If the local authority consider a gift or trust has been done intentionally to lower the value of their assets and avoid care home contributions they may still include the asset as part of the person’s estate when working out any contributions, they may even refuse to fund the cost of care until contributions are made or even pursue the recipient of any gift for payment.
Intention is the main factor which is taken into consideration when deciding whether something is considered a deprivation of assets i.e. were the actions taken at a time when the individual already requires care or were likely to require care in the future?
Retaining benefit of a gifted asset is also likely to raise questions with the local authority. For example, a property transferred into the name of a child whilst the parent is continuing to occupy the same is unlikely to be successful for care home fee avoidance.
Early financial planning is key to successful protection of assets. It is important to take legal advice before making any decisions relating to disposal of assets.
Contact Us
Our Wills and Probate team is made up of highly experienced lawyers who are specialists in this area of law. To see how Jordans Solicitors can help you, call 0330 300 1103 or request a call-back.