How to avoid your house and savings being swallowed up in care fees
You may want to pass on savings or other capital to children or others during your lifetime, but it can affect your eligibility for local authority assistance with care fees and Pension Credit. Transferring an asset out of your name does not necessarily mean that it will not be taken into account in a means test. Both the local authority and the Pension Service can, when assessing your eligibility for assistance, look for evidence of deliberate, or intentional, deprivation of capital such as a property.
What is deliberate deprivation?
Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put him or herself in a better position regarding the means test for care home accommodation (or to claim social security benefits). Guidance published by the Department of Health gives the following examples:
- a lump-sum payment such as a gift or to pay off a debt
- transferring the title deeds of a property to someone else
- putting money into a trust that cannot be revoked
- converting money into another form that has to be disregarded from the means test, eg personal possessions, investment bonds with life insurance
- reducing capital through substantial expenditure on items such as expensive holidays or by extravagant living.
- Selling an asset for less than its true value, may also be seen as deprivation.
Another example would be purchasing a funeral bond at a time when you know that you will need to move to a care home.
Consequences of deliberate deprivation
If you are found to have deliberately deprived yourself of capital you can be treated as still owning the capital given away. If the transferred property added to your actual capital comes to more than £23,250, the local authority may assess you as being able to meet the full cost of your care, even though your actual capital is less than £23,250. The inclusion of transferred capital in your total can also affect your eligibility for Pension Credit.
Avoiding deliberate deprivation
You may, of course, give assets away for some reason, such as for tax planning purposes. The local authority or Pension Service cannot take transferred capital into account in these circumstances unless it can show that the real intention was to deprive yourself of capital for care costs. For information about whether you might be committing deliberate deprivation, click on the image of our flowchart below to download a PDF version.
Don’t take the risk – ask a Probate Solicitor
You can easily put your mind at rest right now. By speaking to an expert, you will know for sure whether your financial plans are legal or whether they’re going to end up losing you money in the long-run. We have offices in Leicester, Market Harborough and Hinckley where local Wills, Trusts and Probate solicitors will be happy to have a chat with you in plain English there and then over the telephone, then arrange for a meeting at a convenient time for you. We also always work on the basis that we will only do the work that you want us to do, without pressuring you to take up services that you don’t want or need right now. Our transparency with costs and pricing also means that we will only ever charge you for what we do – rather than taking percentage of what you inherit.
Speak to a solicitor about deliberate deprivation
Contact us to discuss an enquiry or a case you have or feel free to pop in and see us at your local office by clicking on the links below; Leicester call us on 0116 254 8871. Hinckley call us on 01455 639 900. Market Harborough call us on 01858 467 181.