Depending on your finances, you may need what’s known as “whole of market” financial advice. We’re not qualified to give you this advice, which is why we’ve partnered with Society of Later Life Advisers (SOLLA) to provide you access to a panel of care-qualified Independent Financial Advisers. If you choose to use one of these advisers, we will received a small referral fee.
People sometimes think about giving away some of their savings, income or property to reduce the amount they’ll need to pay towards their care. But a local authority can refuse to pay for your care or ask you to repay care costs if they believe you’ve done this. Here, we explain everything you need to know.
I’m allowed to gift up to £3,000 a year
False: This rule only applies to Inheritance Tax. When it comes to a care funding assessment, gifts of any amount outside your usual pattern of spending can be considered depriving yourself of asset.
If I give away an asset at least 7 years before I need care funding, it’s not a deprivation
False: The 7-year gifting rule only applies for inheritance tax. There’s no limit to how far a local authority can look back to search for any financial gifts you’ve given. But the further back they look, the harder it will be for them to suggest you deliberately deprived yourself of assets.
I can put my money into an Asset Protection Trust to protect it from care costs
False: Some companies advertise these trusts as a guaranteed way for you to avoid paying for care, but this isn’t true. It may still be considered as deprivation.
I can sell my home, or other assets, for less than their true value to avoid deprivation rules
False: Selling an asset for considerably less than its true value can be considered a deprivation.
Having an up-to-date Will means my assets will be protected
False: Having an up-to-date Will is important but it will only come into effect after you have died. It can’t be used to protect your assets whilst you’re alive.
When you gave away or moved your asset, was avoiding paying for care the reason, or a significant factor in your decision?
At the time, were you fit and healthy, with no way to see a future need for care?
How local authorities investigate
Local authorities will often ask you to share bank statements going back months, years or even decades to help them decide if you’re entitled to financial help. If you used to have an asset but you don’t own it anymore, you’ll need to prove this by giving some evidence to the local authority.
This could include:
- A trust deed
- Deed of gift
- Receipts of expenditure
- Proof you used the money to repay any debts
- A lump sum payment to someone else, for example as a gift
- A transfer of title deeds for a property
- Assets that have been converted into another form, such as personal possessions – for example, artwork or cars.
Selling your home to your children for a nominal fee (e.g: £1)
If you sell your house, it needs to reflect its real value.
Purchasing something you don’t need, outside of your normal spending pattern
Such as expensive artwork or a new car. Possessions aren’t considered in the financial assessment but if you purchased them to ‘hide’ your money, it could be considered a deprivation.
Giving away your right to income from an occupational pension
The financial assessment will count income you’ve given away as well as any money you have.
Gifting large sums of money for certain events
Like Birthdays, Weddings or Religious Holidays. You can continue your usual pattern of spending, but if you start giving away larger amounts than you have before, it would likely be seen as a deprivation.
Improving your home to help you manage
Sue and John live at home but recently, Sue has found it harder to get up and down stairs and to climb in and out of the bath. Sue arranges for carers to come and help her regularly and spends £12,500 from their joint savings to install a stair lift and a wet room. Sue wasn’t trying to avoid paying for care by spending this money, so it shouldn’t count against her application for help with care costs.02
Moving to a new home better suited to your needs
Stephen’s needs more care than he used to, and his home isn’t suitable for him anymore. He decides to move to Surrey to be closer to his children, so they can see him and offer support more regularly. To afford his move from Yorkshire, Stephen adds £50,000 of his savings to the amount he got from selling his house – this allows him to buy a bungalow in Surrey. Stephen spent this money to be closer to his family, not to avoid paying for care.03
Equipment to help you manage a disability
Christine recently suffered a stroke, leaving her paralysed on one side of her body. To continue to get out to see her family, she spends £8,000 on a second-hand car adapted for wheelchair users. She’s the registered owner, but her children are insured as drivers to be able to take her out for trips. Christine spent this money to keep her independence, not to avoid paying for care.
These are just examples and, of course, every case is different. As well as your motives and the timing, your local authority will consider whether your financial choices are in proportion.
If Christine, from our third example, had bought a luxury car costing £80,000, then the local authority could suspect that a significant factor in this choice was an attempt to avoid this money being used to pay for care.
If you’re not sure whether your choices could be considered as deprivation, it’s a good idea to get legal or financial advice from a specialist before you go ahead.
If you and your partner have a joint account with £50,000 of savings, you can split it into two accounts of £25,000. This means the person who needs care would only need to spend £1,750 rather than £26,750 before you’re entitled to funding support. Your partner’s £25,000 won’t be included in any decision about your finances.
If you jointly own your home, you can put the ownership of it into ‘Tenants in Common’ rather than ‘Joint Ownership’. If the person who doesn’t need care were to pass away, their share of the house could be passed on to another family member. Otherwise, their share will go to the person needing care, and could then be used to pay for care.
This means treating you as though you still own money you’ve given away or spent. Each country in the UK allows you some savings that don’t count in your financial assessment. But under Notional Capital rules, you may have to spend this on care after all.
An example of Notional Capital
Mark lives in England, which means he’s allowed to keep £14,250 in savings. He gives his son £9,000 and a week later, moves into a care home. The local authority decide he’s deprived himself of money and apply Notional Capital rules. So, while Mark has £20,300 in savings left, the local authority treat him as though he has £29,300. This means the minimum amount they need to leave Mark with is £5,250. That’s £9,000 less than the £14,250 allowance.
Similar to Notional Capital, this is where you have either given away your right to claim an income or haven’t applied for income you’re eligible for. It means the local authority can treat you as though you’re receiving this money.
An example of Notional Income
Joan has a pension worth £40,000. She’s chosen to receive £40 a week as income, but the maximum she could get is £150 a week. The local authority can assess her income based on Joan receiving £150 a week.
Recovering charges from someone else
If you move an asset to someone else to avoid it being included in your financial assessment, the local authority can require them to pay for your care up to the value of that asset.
An example of recovering charges from someone else
Mohammed lives in Northern Ireland, so he can keep £14,250 in savings that won’t be counted in a financial assessment. He’s paying his own care costs and moving into a care home. He has £30,000 in savings but gives £10,000 to each of his three children. The local authority will still consider this as Mohammed’s money. They won’t count savings up to £14,250, but they’ll expect his children to pay back the other £15,750 for his care. That’s £5,250 each.
If the local authority organises care for you but you refuse to contribute towards the cost, they can treat this like a debt and apply to the court to request that you pay them back. They can ask for repayment up to the value of the assets they believe you’ve deprived yourself of.
Getting the right advice01
Contact your local authority and ask for a copy of their formal complaints procedure and contact details for the Local Government Monitoring Officer. Their role is to make sure the local authority is following all relevant guidance and legislation.02
Make your formal complaint and send a copy to the monitoring officer.03
If the local authority doesn’t change its decision, they’ll explain how to take your complaint to the Care Ombudsman.
Keep your complaint focused on your motive and the timing of your decision to get rid of an asset.
Share any evidence you have, like bank statements and receipts that show your pattern of usual spending existed before you knew you’d need care.
Give details of any correspondence you’ve had with the local authority, including names and dates.
It isn’t necessary for you to have legal representation, but you can if you wish to.
Typically, you have 12 months to make a complaint, from the date you have the local authority’s decision that you deprived yourself of assets. The local authority should respond within six months, but often it’s quicker.
Understand your options
Knowing your options before you need them can help you get the right care at the right time.
Find local help to you
Whether you need some help at home, or want to find out more about Care Homes in your area, our Finding Care tool can help.
Need legal advice?
Solicitors for the Elderly are an independent specialist group of lawyers who support and make a difference to older people. They may be able to help you with Power of Attorney and Deputyship.