If a person goes into residential care, their local authority will need to carry out a financial assessment to determine how much that person can contribute towards their care home fees. This is known as the means test. A person may attempt to reduce the assets that they own that could contribute towards their care fees, however it should be noted that this could be seen as deliberate deprivation by the local authority and could have consequences.
What is deprivation?
Deprivation is when a person has decreased their assets in order to reduce how much they could contribute towards their own care. Deprivation could be by:
- Making gifts.
- Putting assets into trust.
- Paying off someone’s debts.
- Converting assets into disregarded assets, for example converting cash into chattels. See our previous article for more information on disregarded capital.
- Selling an asset for under its value.
In most cases, deprivation will be considering deprivation of capital, however it is also possible for deprivation of income, for example if a person gives or sells the right to income from an occupational pension.
When is deprivation deliberate?
In order for deprivation to be treated as deliberate, the intention to avoid care fees must have been the person’s significant or only factor for the deprivation. Along with this, it must also be proven that the person had a reasonable expectation that they would need care and support at the time of the deprivation. Finally, local authorities will also need to consider if the person had a reasonable expectation of needing to contribute towards the cost of their care needs.
Consequences of deliberate deprivation?
If a local authority decides that a person has committed deliberate deprivation, for the purposes of the financial assessment they can decide to treat the person as if they still own that asset. This is known as notional capital and income.
If assets have been transferred to a third party, they may be liable to pay the difference between what would have been charged and what was charged at the time of the assessment. Where multiple third parties are involved, each will not be liable for any more than their proportion. The local authority may use the County Court to recover unpaid debts but should only do this after they have used all other reasonable options.