Gifting and Care Costs – Intentional Deprivation of Assets.
With nearly 20% of the population being aged 65 and over, more and more families are faced with the reality that a loved one may need extra care at home or face a move into residential care. With the costs of care rising, many worry how they will afford to pay for care and whether they will have anything left to pass on to their families.
At present, those with assets of £13,500 or less will have their care fully funded by the local authority or NHS. Those with savings of £23,250 or more will only receive some contribution if they meet certain medical criteria otherwise, they will be required to meet their care fees in full. This is the same whether the care required is delivered at home or residential care is the best option.
With the costs of the family home as well as savings being taken into account, the majority of people will have assets far in excess of the current minimum limits. With such a large bill to meet, many find their assets being depleted at an alarming rate. This can be disheartening and it is no wonder that many will consider gifting their assets to family and friends before it is eaten up by a large care bill.
However, timing here is key. To make lifetime gifts is of course ok. Many do this in order to financially assist younger family members or to reduce their estate in order to limit their exposure to inheritance tax. In relation to care costs, an issue will arise if you intentionally give away assets such as property or cash in order to reduce your estate so as to pay fewer costs. This is known as “intentional deprivation of assets”. If your Council considers that an intentional deprivation has occurred, they may assess you as if you still own the gifted asset, leaving you back at square one. If you make a gift, the person receiving that gift could also be liable to pay for some of your care.
So what counts as an “intentional deprivation”? When deciding whether the disposals you have made have been deliberate, it will be considered whether you knew, or there was a reasonable prospect of you needing care, and avoiding paying for care was your main motivation in making the gifts.
It is not just gifting that counts as an intentional deprivation. The Council will look into your expenditure and if they consider that there is a pattern of spending which is uncharacteristically high or frequent, or if you have recently used savings to buy a vehicle or jewelry, they could consider that such spending was purely to reduce your estate to avoid paying care fees. The same could be said for putting the money into an irrevocable trust or indeed gambling the money away!
If you are worried about care costs and would like advice on how to protect yourself against them, please contact Hollie Skipper at hskipper@meaby.co.uk, or feel free to call on 020 3861 5158.
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