Care home fees are expensive but you want your loved ones to go into the best possible care so it can be hard to think about the costs.
The more income or capital a person owns, the more they will be expected to pay for their care. Of course, this can be upsetting as they may want their savings and assets to go to family members in the future. With this, many people consider reducing their assets deliberately to qualify for social care funding.
If you want to know more about the deprivation of assets, read our handy guide.
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Deprivation of assets is the act of intentionally reducing capital and income meaning they don’t technically own it anymore and it cannot be used to cover care home fees.
This can be anything from:
The value of assets is what is used to determine how much will need to be contributed towards care home fees.
There are many ways to reduce the amount that your loved one contributes to their care costs.
Deprivation of assets only applies to the deliberate deprivation of assets. For example, giving away your money is seen as a deprivation of assets, but there are other ways to do this too:
When the local authorities will be calculating how much is needed to contribute towards care costs, they will check to see whether you have committed an intentional deprivation of assets.
For this, they will take into account whether paying for your own care was the reason for someone to give away their assets or whether it was known that assets were needed to be used to pay for their care.
It is not as simple as giving away your assets, though. If the local authorities believe that your loved one has deliberately attempted to reduce their contribution to care home fees, the value of the assets may still be included in the means test.
Nearly half of the population in the UK already in a nursing home or in residential care receive funding from social services.
The amount of support that a person will receive for their care costs will all depend on the value of their assets. After a needs assessment, your local council will determine whether a person needs to move into a care home, and what level of care they will need.
Then, a financial assessment or a means test will review your assets and their value to find out whether a person is entitled to financial support.
If someone moves into a care home full-time, the value of their home will be included except if another family member, such as their partner, is still living there.
The deliberate deprivation of assets can have consequences. For example, if the local authorities decide that there has been a considered reduction to assets to avoid paying care costs, they may still calculate your fees based on the value of these assets as if a person still owned them.
There are three ways for the local authority to take action:
This is why you want to deprive your assets correctly to avoid any of the above consequences.
The amount paid towards care home fees depends on where you are living in the UK. The thresholds for state-funded care for each country can vary. There are thresholds for self-funding.
Here are the UK saving thresholds for care home fees in 2022/23:
|Country||Upper Threshold||Lower Threshold|
*Because there’s no lower limit in Wales, if your loved one’s savings and assets are worth less than £50,000 then they’ll receive the maximum support from their local authority regardless.
The motive of reduction of assets lies in the timeframe. The local authorities will see when the reduction of assets took place to determine whether it was to avoid paying care home fees or not.
If assets and capital were reduced in some way at a time when a person could envision that they would need care and support relatively soon, then the local authorities may feel that it was a deprivation of assets. If said person was fit and healthy at the time of the reduction of assets, then it would not be considered as such.
Another reason that a person might reduce their assets is to avoid inheritance tax on a gifted item, such as a property.
The local authority will take it all into consideration with facts and reasons for the reduction of capital and assets, but in some cases, it can be challenged.
Notional capital is capital which a person does not own anymore because they have deprived themselves of it in order to claim benefits, such as financial support from social services to fund their care home fees.
This is why it is important to correctly reduce your assets in a reasonable timeframe, otherwise you may still have to pay for care costs with the value of an asset that you no longer own.
It can be complicated to understand all the ins-and-outs of the deprivation of assets, so if you have questions, it is best to reach out to your local council first.
As the council will be making the decisions on a deprivation of assets, it’s best to find out all you need to know before potentially experiencing problems later on.
Your local council may also be able to other assistance with your care funding such as deferred payment schemes.
Before taking an action against your local authority’s decision, it may be best to seek legal advice. You will want a specialist in community care law for your loved one to have the best chance of understanding and challenging a decision.
Legal advice can be very costly and it may also be worth checking whether you qualify for legal aid to support with any of the fees.
If it is deemed necessary that a person requires care and support, local authorities will review your capital and assets in a financial assessment, with close attention paid to the dates if any assets were reduced.
Any items that a person deprived themself of will be reviewed, such as:
The decision made by the local authorities regarding deprivation of assets, with all relevant evidence, should be in accordance with CRAG guidelines. If it does not fall within these guidelines, then your loved one is able to challenge this decision.
If you were wanting to challenge the decision as the person the decision is about or on behalf of a loved one, then a complaint can be made to the Local Authority Ombudsman following the correct complaints procedure.
Furthermore, it could even be challenged in court, with a judicial review. With this, legal advice will need to be considered.
We hope this comprehensive guide has provided all you need to know regarding the deprivation of assets. With support from your family and friends, as well as your local council, you will be able to protect your assets in an ethical way.
Every situation is unique and paying for residential care or nursing home fees can be complex, reaching out for support is the best way to plan for your future.