Deprivation of assets and care needs later in life

[TravellingWanabee]

I was wondering if anyone has any experience of this situation: we have a relative who will shortly move into a retirement home after selling their property. They want to give us a lump sum after their house sells.

They can currently cover all fees in the retirement home, but I'm concerned about what happens if later down the line they have care needs that means that their current income won't cover everything (and once the remainder of their savings have gone)? I know that the council will look at deprivation of assets and if they consider that the person purposefully gave away assets to avoid care costs, that they can come after the person the money was given to. But what I'm not sure of is how they prove intent?

I mean right now, they have enough money to cover their costs, and there's no guarantee they will need more care later down the line that they wouldn't be able to pay for. And there's no intention of doing this to avoid care costs, but it's always a risk that they won't be able to afford care costs in X number of years, and I'm just concerned that in 10 years time the council could come after us!

I fully appreciate that if they were to give their money away today knowing that tomorrow they couldn't cover their care, that would be wrong, but I guess I'm wondering what happens if things change 10 years down the line? Thanks!

If they’re selling their home in order to move into a retirement home then I think you’d find it quite difficult to argue, if you had to, that the gift of money wasn’t deprivation of assets, even if this isn’t the intention. If they are acknowledging by moving into accommodation more suited to their needs, that they expect to have some support needs in the future, then the council would argue all parties had a reasonable expectation that the money might be needed.

A decade or more down the line and you might have more success. But that’s the problem, you can’t guarantee that it would be that far into the distance.

The best thing you can do is seek advice from a solicitor who specialises in these matters.

They will assist in ensuring everything is seen as above board and can apply, if necessary, to the Court of Protection to get their approval.

I think I saw a post from someone in LA social care that said that the council would only go after the money if it was given away after the care needs arose.

It sounds as if your relative is going into retirement accommodation rather than a care home, so has no care needs?

Are they frail? Likely to live for a good few more years?

If they keep sufficient funds to keep paying for their current needs for the rest of their life, plus contingency, I wonder how much risk that is?

Sorry, this is definitely deprivation of assets. They’re giving the money to you when they’re fully aware that they require care and will need to pay for it.

The only way people can get away with gifting money is if you can argue that at the time the gift was made, the giver had no expectation of needing care. That obviously isn’t the case here because they already know they need care. So if their money runs out then yes, the council will quite rightly come after you to retrieve the money they gave you.

I find this all so vague. We are 59 still working etc and healthy. We are about to give ds money towards a house deposit. Is this deliberate deprivation? We are not stupid and can see we may well need care in the future but that's true of anyone, so are we not allowed to give any money away at all, because loads of people do.

Thank you for your reply. The thing is, right now he can afford any care needs he has, his income covers everything. It's just the possibility later down the line that care needs increase and the income then won't cover it, but right now those needs aren't there. Does that make a difference, or will they say 'well, you're already old, therefore you should have expected that your needs will increase'?!

MrsPsmalls you currently don’t have care needs so you can gift money. The issue arises if you already have care needs and are giving away the money to avoid paying for your care.

What is the value of the lump sum, surely that makes a difference? If they sell the house for 300k and give you 10% of that so 30k then surely it doesn't count as they would reasonably expect to be able to cover their costs with the remainder?

If for example they gave away £30k and kept £270k, that would be fine and dandy as long as lifetime care costs didn’t exceed £270k. But if (when) the £270k ran out the local authority would quite reasonably attempt to retrieve the remaining £30k.

It's only going to be an issue if the council suddenly find themselves having to pay lots for care for someone who could have self-funded if they hadn't given the money away when that care need was foreseeable.

Sounds like you're fine.

www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs40_deprivation_of_assets_in_social_care_fcs.pdf

Intention
Your intention to avoid your care charges must be a significant factor, or the only reason, you have transferred an asset elsewhere, in order to be found to have deprived yourself. The local authority must justify their decision if they intend to take a transferred asset into account.

Foreseeability
Annex E of the guidance states it is unreasonable to decide you have disposed of an asset to reduce the level of care charges payable if, at the time of the disposal, you were fit and healthy and could not have foreseen a need for care and support.

@UpTheJunktion

I think I saw a post from someone in LA social care that said that the council would only go after the money if it was given away after the care needs arose.

It sounds as if your relative is going into retirement accommodation rather than a care home, so has no care needs?

Are they frail? Likely to live for a good few more years?

If they keep sufficient funds to keep paying for their current needs for the rest of their life, plus contingency, I wonder how much risk that is?

Well, it's more of a cross over accommodation, so it caters for people with care needs if they have them, but also accommodates elderly people who don't have them.

To be honest, no they're not in the best of health, but aside from help with cleaning, laundry and internet shopping, they can do everything else themselves and can already afford to fund these things.

They're looking at giving away around 40,000 (split between children) and that would only leave them with around 20,000 in savings which isn't a huge amount. With their current expenditure, they can still save a little every month.

For us, we feel it's too risky, but another one of the children could really do with the money.

I just don't know if the council would claim that it was intentional to avoid care costs (it's not, but we don't have a crystal ball!)

Well, there would be the remaining £20k, the gap between current expenditure and income, and there may be other entitlements that would be used towards care costs - Attendance Allowance, for example, which is not means tested.

The bulk of care costs - the cost of the accommodation in the home - is already covered by the current expenditure budget, so they would continue to have that available.

Yes that would be deprivation of assists and would take them below the £23,250 threshold for the funding local authority care services . They would need a financial assessment and the LA would be all over this

Sounds like they are moving into some sort of Extra Care facility, independent living in self contained apartments, with some communal areas, and staff on site. If they have bought, they'll likely have a service charge, similar if someone is renting, but nothing like the costs of residential care.

Moving to that type of accommodation means the need for residential care is usually delayed, or not required at all. Also, if they have to go into hospital, their discharge won't be delayed on the grounds of unsuitable accommodation - reduces bed blocking.

Sorry OP, I don't know the legalities of how much they can give away, just wanted to say I think that type of accommodation is excellent for older people.

PurpleWithRed's Age UK link is the most accurate info.

Lots of people live independently in their own homes and have a cleaner / housekeeping help for the things you say your relative needs help with - cleaning, laundry and internet shopping. Indeed, some of these people are in their 40s and with jobs and children, so I don't see it as an indication that they know that their care needs will increase to 'care home' levels.

We sold our home to the kids for £1 about 25 years ago.

My neighbours, while in their 70s, signed their house over to their 2 grown children so that they would have no assets should either of them require care.

I guess it was all legal and above board, but still, it doesn't sit right from where I stand. The safety net is there for people who genuinely need it, and this was definitely a clear move to avoid paying.

@TravellingWanabee

Thank you for your reply. The thing is, right now he can afford any care needs he has, his income covers everything. It's just the possibility later down the line that care needs increase and the income then won't cover it, but right now those needs aren't there. Does that make a difference, or will they say 'well, you're already old, therefore you should have expected that your needs will increase'?!

He must have a bloody good income if its enough to cover care home fees - think about £1k a week!

@SoonToBe60 - he isn't in a care home, he is in a retirement home.

And has sold a property so has the money set aside for the retirement home fees.

And once / if you do need to be in a care home all your income , pension (private and state) plus additional benefits like Attendance Allowance, all contribute towards the care home fees.

My parents played things by the book and my mum is now self funding and LP paying huge care home fees for 24 hour care.
I know morally that's the right thing to do, but I just wondered HOW the council would know if mum had gifted me a lump sum in the past. I know in theory they can claw back the money, but mum is only 70 and we had no idea 5 years ago that she and dad would become ill so quickly. If the money runs out would the council start asking for bank statements going back years and years?

...all your income , pension (private and state) plus additional benefits like Attendance Allowance, all contribute towards the care home fees.
You don't get Attendants allowance if you're in a care home

@Devlesko

We sold our home to the kids for £1 about 25 years ago.

My Aunt did this, 6 months later her son kicked her out of the house

I think you can get attendance allowance if you are in a care home and self funding. AA stops if you no longer self fund.

@Candleabra

My parents played things by the book and my mum is now self funding and LP paying huge care home fees for 24 hour care. I know morally that's the right thing to do, but I just wondered HOW the council would know if mum had gifted me a lump sum in the past. I know in theory they can claw back the money, but mum is only 70 and we had no idea 5 years ago that she and dad would become ill so quickly. If the money runs out would the council start asking for bank statements going back years and years?

Read the link in Purplewithred's post above.

Sorry your parents are so ill at such a young age.

@upthejunktion thank you that's a very helpful factsheet.