Deprivation of assets is the term used to describe intentionally decreasing your overall assets in order to qualify for funding towards care services provided by the local authority. This could include spending, making gifts or certain investments.
When would this occur?
If a local authority arranges your care services, you will be means tested to see if you need to contribute towards those care costs. If your capital and income is above £23,250 you’re likely to have to pay your care fees. If your capital and income is under £23,250 you could be entitled to help from your authority.
If your local authority feels that you have deliberately deprived yourself of assets in order to reduce your ability to pay for care, these assets will be considered ‘notional capital’ and will still be taken into consideration when reviewing your ability to pay for care. Alternatively, the local authority could seek to reclaim those assets.
You may want to pass on savings or other capital to your children or others during your lifetime, but this can affect your eligibility for funding, and you should consider the impact this could have in the future.
Deprivation could include:
- A lump-sum payment made to someone else, for example as a gift
- Substantial expenditure that has been incurred suddenly and is out of character with previous spending
- The title deeds of a property have been transferred to someone else
- Assets put in to a trust that cannot be revoked
- Assets converted into another form that are disregarded in the final assessment, for example personal possessions
- Assets reduced by living extravagantly, for example gambling
- Assets used to purchase an investment bond with life insurance
- Selling an asset for less than its true value.
The timing and motivation for a disposal of assets are of central importance and the local authority has a responsibility to consider these elements as part of means test. In order to claim that you have deprived yourself of assets, your local authority show that you were aware that you may need care and support in the future when you carried out the transfer.
In an effort to help you understand the process, Age UK has produced a factsheet, which should be read in conjunction with Age UK’s other factsheets on care home funding.
- Information on government guidance that must be followed by local authorities
- The definition of deliberate deprivation
- The concept of notional capital and local authority powers of financial recovery.
The timing and motivation for a disposal of assets are of central importance and the local authority has a responsibility to consider these elements as part of means test.
Deprivation of assets in social care (PDF 401 KB)
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