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.
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:
Another example would be purchasing a funeral bond at a time when you know that you will need to move to a care home.
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.
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.
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.
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