6.3 Deprivation of assets
Deprivation of assets is where someone deliberately reduces their overall assets in order to reduce the amount that they are charges towards their care and support.
If the Council decides that you have deliberately given away or disposed of some or all of your savings or other capital asset or income in order to reduce the amount of your assessed care and support charge the Care Finance Officer will complete your financial assessment as if you still had those savings, asset or income. The asset or income would show on your assessment as notional income or notional capital.
If savings, asset(s) or income have been transferred to a third party in order to reduce your care and support charges the Council has the legal power8 to recover care and support charges from that third party where those charges relate to the value of the transferred asset or capital or to treat you as though you still had that asset or capital and show the asset or capital as notional income or notional capital on your financial assessment.
A person can deprive themselves of capital in many ways, but common approaches may be:
- a lump-sum payment to someone else, for example as a gift
- substantial expenditure has been incurred suddenly and is out of character with previous spending
- the title deeds of a property have been transferred to someone else
- assets have been put in to a trust that cannot be revoked
- assets have been converted into another form that would be subject to a disregard under the financial assessment, for example personal possessions
- assets have been reduced by living extravagantly, for example gambling
- assets have been used to purchase an investment bond with life insurance
However, this will not be deliberate in all cases. Questions of deprivation therefore should only be considered where the person ceases to possess assets that would have otherwise been taken into account for the purposes of the financial assessment or has turned the asset into one that is now disregarded.
It is up to the person to prove to the local authority that they have not deprived themselves of the asset. If they are not able to, the local authority will assess you as if you still had the asset.
There may be many reasons for a person depriving themselves of an asset. A local authority should therefore consider the following before deciding whether deprivation for the purpose of avoiding care and support charges has occurred; (a) whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; at the point the capital was disposed of did you have a reasonable expectation of the need for care and support? (b) Did you have a reasonable expectation of needing to contribute to the cost of their eligible care needs?
For example, it would be unreasonable to decide that you had disposed of an asset in order to reduce the level of charges for your care and support needs if at the time the disposal took place you were fit and healthy and could not have foreseen the need for care and support.
Your intention to avoid your care charges must be a significant factor, or the only reason, you have dispossessed of an asset, in order to be found to have deprived yourself.
When deciding whether a deprivation has occurred the local authority should take into account:
- Whether avoiding care and support charges were a significant motivation timing of the disposal?
- When the asset was disposed of, could you have a reasonable expectation of the need for care and support?
- Did you have a reasonable expectation of needing to contribute to the cost of your eligible care needs?
We may conduct our own investigations into whether deprivation of assets has occurred, rather than relying solely on information that you provide.
Capital can mean many different things and this is not a definitive definition. The local authority will consider the individual asset on its merits. In general it refers to financial resources available for use and can be from sources that are considered more durable than money in the sense that they can generate a return.
The following list gives examples of capital. This list is intended as a guide and is not exhaustive:
- buildings
- land
- If you own multiple properties any property that is not your main home will be taken into account if you have non-residential or residential care
- Your main home will be taken into account after the first 12 weeks of residential care
- If your main home is jointly owned your equitable share of the property will be taken into account if you need residential care
- National Savings Certificates and Ulster Savings Certificates
- Premium Bonds
- Stocks and shares - the market value of the shares will be taken into account less 10% even if the shares were purchased before you had knowledge of a need for care
- Capital held by the Court of Protection or a Deputy appointed by that Court
- Any savings held in:
- a. Building society accounts
- b. Bank current accounts, deposit accounts or special investment accounts. This includes savings held in the National Savings Bank, Girobank and Trustee Savings Bank
- c. Save as you earn (SAYE) schemes
- d. Unit trusts
- e. Co-operatives share accounts
- f. Cash
- Trust funds
Deliberate reduction of your assets when you have knowledge of a need for care will be considered a deprivation. This list is intended as a guide and is not exhaustive. This may include:
- Transferring a property to a family member/friend/third party at undervalue or for no value
- Selling a property at undervalue
- Putting a property into multiple names
- Creating a trust to avoid a property being taken into account
- Investing the proceeds of sale or spending the proceeds of sale of a property
- Placing the proceeds of sale in an account not belonging to you
This list is intended as a guide and is not exhaustive. This may include:
- Lump sum payments to a family member/friend/third party.
- Large gifts – a large total sum gifted accumulatively over a year may be considered a deprivation.
- Reasonable gifts such as birthday or Christmas presents would not be considered a deprivation.
- Allowing a family member/friend/third party to access your bank account and withdraw funds with or without your consent.
- Where you chose to withdraw funds from your pension on retirement so that you can manage it directly, this may be treated as assessable capital. If the funds released from the pension are invested in assets that are disregarded, the fund could still be assessable capital if the reinvestment is treated as deliberate deprivation of capital to avoid care charges.
- Expenditure deriving from capital from a pension lump sum may be regarded as a deliberate deprivation of assets in some circumstances.
This list is intended as a guide and is not exhaustive. This may include:
- Buying expensive assets, for example art work or cars.
- Living beyond your means or spending out of character.
- Buying Investment bonds with life insurance.
- Putting funds aside for funeral costs without buying a funeral plan.
There is further information about deprivation of assets in the Care and Support Statutory Guidance Annex E
- 8Section 70 of the Care Act 2014.