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Mutiny on the bounty

Where a person going into local authority care currently owns assets of more than £16,000, the local authority can make a claim on those assets to pay towards the care costs.

For this reason, people sometimes consider making gifts of assets prior to going into care. This would bring the question of deliberate deprivation into focus.

Deliberate deprivation is the term used when someone knowingly gives away assets in order to qualify for care benefits without payment. If a person has given away assets in order not to have to use those assets to pay for their care in a residential or nursing home, the local authority may deem them as having deliberately deprived themselves of assets which would otherwise have been available to pay for their care.

If someone has deliberat ely deprived themselves of assets, the local authority may assess the person as having notional capital or income, meaning that they will assess the person needing to go into care as if they still have the assets which they have given away, even though legally they no longer own them.

There are no clear rules that determine the circumstances in which a person would be assessed as having deliberately deprived themselves of assets.

The Department of Health, in its guidance to local authorities on how to assess the fin ances of people who need to enter a residential or nursing home, acknowledges that: “There may be more than one purpose for disposing of an asset, only one of which is to avoid a charge for accommoda tion. Avoiding the charge need not be a resident&#39s main motive but must be a significant one.”

The timing of the gift of assets will also be relevant. Here, the DoH says: “The timing of the disposal should be taken into account when considering the purpose of the disposal. It would be unreasonable to decide that a resident had disposed of an asset in order to reduce his charge for accommodation (that is, the cost of a place in a residen tial or nursing home) when the disposal took place at a time when he was fit and heal thy and could not have foreseen the need for a move to residential accommodation.”

The Department of Social Security has also issued guidance about motive and timing in the context of a claim for income support. This also rai ses the issue of the extent to which the claimant knew that the assets would be eligible for a means-tested benefit by giving away or spending ass ets which would otherwise have been included in the means-test calculation.

As indicated above, a local authority can treat a person as having notional capital or income if it decides that he has given away property or savings with the intent of paying less for the costs of the care, that is, a deliberate dep rivation has been made. In these circumstances, it must then decide whether it will pursue the original owner or the person to whom the asset has been gifted.

If assets have been transferred with the intent of avoiding using them to pay for care within the six months before entering a home or while a person is in a home, the local authority has powers to rec over from the person to whom the assets were given any money owed to it in res pect of the original owner&#39s place in a home.

A local authority has no power to claim money owed to it from a person to whom assets were given or sold if the assets were transferred longer than six months before the original owner entered the home. However, it may still decide that the transfer was made with the intent of avoiding paying fees for a place in a home and may say that the original owner has notional capital or income.

It could, therefore, charge the original owner for home fees although, to date, there do not yet appear to be many instances in England where local authorities have used this power.

However in the case of Yule v South Lanarkshire Council, the issue arose as to whether property transferred to a relative a year before the owner&#39s application for long-term care funding could be taken into account by a local authority in calculating not ional capital. I will look at this case next week.

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