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Deliberate deprivation of assets rules and care home fees

1 May 2018

Assessing for deliberate deprivation of assets can be a grey area for many local authorities. North Yorkshire County Council was recently criticised by the Local Government and Social Care Ombudsman, who say that they got the decision wrong. Liz Hardie, technical specialist Prudential, looks at the case. 

The Case of Mrs Y

Mrs Y was hospitalised in 2007 after having a stroke. She moved directly to a care home from the hospital and her home was sold. The family began paying for her care without asking the Council for financial assistance.

The family went to a financial adviser to see about investing Mrs Y’s money and were told that she could make gifts of up to £3,000 per year. Mrs Y was in the habit of making gifts to family members for birthdays and Christmas, so she carried on making gifts after she moved into the care home. She gifted between £250 and £3,000 per year each to various family members until 2014.

By January 2015, Mrs Y’s capital had fallen below the financial threshold and the family asked the Council for help with paying the fees. The Council agreed to this, after assessing that Mrs Y should remain in her care home, and began paying the fees, subject to a financial assessment being completed. Mrs Y’s care home was more expensive than a local authority would usually pay in fees, but the Council agreed to pay the difference in charges because Mrs Y had been living there for a long time.

The family told the Council about the gifts and gave them a breakdown of the gifts made at a financial assessment meeting in February 2015. In April of that year, the Council stopped making payments to the care home, having decided that the gifts were deprivation of assets.

The family complained to the Local Government and Social Care Ombudsman after the care home threatened to take further action against Mrs Y. Her income did not cover the cost of the fees and there was a debt of around £30,000. Even more worrying for the family, was the possibility that Mrs Y could be evicted from her home of more than 9 years.

The rules

The Charging for Residential Accommodation Guidance (CRAG) was in place when Mrs Y moved into the care home. The Care Act 2014 replaced this in England & Wales. In the rest of the UK, the CRAG rules are still relevant.

Deliberate deprivation happens when an individual gives away an asset for the main purpose of avoiding care home fees. For capital assets, acceptable evidence of disposal would include a trust deed and deed of assignment. The guidance points out that using assets (i.e. cash) to purchase an insurance bond would be a common approach to deprivation.

The guidance says that although a local authority can consider that deprivation of assets has taken place, it should not be automatically assumed. There may be valid reasons why someone no longer has an asset and a local authority should ensure it fully explores this first. The following points should be taken into account:

1. Whether avoiding the care and support charge was a significant motivation;

2. The timing…when the asset was given away, did the individual expect to need care and support?

3. Was the individual expecting to contribute to the cost of their eligible care needs?

“For example, it would be unreasonable to decide deliberate deprivation if at the time of disposal the individual was fit and healthy and could not have foreseen the need for care and support.”

So, where did it go wrong for North Yorkshire County Council?

The Ombudsman Investigation

The Ombudsman investigation found various faults with the Council’s decision, including:

  • the Council saw the gifts as deprivation of assets without doing a full financial assessment and included them in the calculation of Mrs Y’s money. This meant that Mrs Y was above the threshold to get financial assistance.
  • the Council’s calculation of the total amount gifted was higher than the family had calculated, but the Council had no evidence backing up the figures used in their calculations.
  • the Council did not take into account that the gifts were made over a long period of time and when asked, couldn’t provide evidence that the gifts were made purely to avoid care charges. The family argued that there were other reasons for making the gifts and pointed out that Mrs Y had paid in full for her own care for 9 years.

The Ombudsman has now ordered the Council to reassess the financial situation, to apologise to the family and to repay fees.

Conclusion

Although the local authority got it wrong on this occasion, this is not always the case and advisers and paraplanners need to be aware of this when making recommendations. A local authority can see someone buying an asset that is not included in the capital assessment as deliberate deprivation. Some assets, like life insurance investment bonds, are disregarded from the capital assessment, but depending on the reason investing in them may still be viewed as deliberate deprivation by the local authority.