Is Deprivation Of Assets A Criminal Offence?
Since care home expenditure is means-tested local councils conduct a financial assessment of individuals claiming care home residency, taking into account all of the savings, capital and incomes of claimants. This helps them decide upon the amount that the care home resident is expected to contribute towards their care and the amount that is due upon the state.
If the claimant is found to have (a) disposed of assets whether, through sale or gift to immediate family (b) without being able to prove intention other than avoidance of care home fees, this act will be classified as deprivation of assets.
Is Deprivation Of Assets A Criminal Offence?
Yes, deprivation of assets is considered a criminal offence simply due to the deliberate reduction of assets by claimants of benefits, especially those who are about to apply for care home residency.
However, in order to prove that a deliberate reduction of assets has taken place, there needs to be evidence supporting the below essential actions for deprivation of assets to be applicable:
- The reduction of assets has occurred with a seven-period of the claimant applying for care home residency
- The applicant knew at the time of the said reduction of assets that they will be in need of care home residency shortly
- There appears to be no other motivation or intention for reduction of assets that may be proven with supportive evidence
Should the claimant have already moved into the care facility and there has been a lapse a time when the discovery of deprivation of assets is made, the claimants will be required to pay the differential in the amount due upon them had their assets been taken into consideration when the initial assessment was made.
In certain cases when deprivation of assets has been proven, social services have been known to recover the assets transferred to a family member and at times, they have refused to cover care home costs.
Council authorities may also apply for a judgement debt in Country Court; or in case of false declaration of financial assets in a Social Security form, the individual can be taken to a Magistrate’s Court as the act is considered as a criminal offence.
Certain individuals choose to gift their property to their children in order to avoid its inclusion in their financial assessment for care home fees contribution. However, if this grant takes place within a 7 years gap of the same individual claiming for care home residency, local council authorities can consider this as deprivation of assets; which is a deliberate reduction of assets to reduce the claimant’s contribution towards care home fees.
Another option of asset reduction that is frequently used is to transfer one’s assets to a trust rather than an individual. In this case, there will be a group of individuals considered as a trust to whom the property’s ownership is entrusted with. While this is a feasible option in case of having a legal dependant or a minor who may benefit from the act, however, if it is used to simply avoid care home fees, there are many risks attached. It is advisable for claimants to seek professional financial advice prior to any decision regarding their property.
To learn more about the topic, we will discuss the following areas:
- What Counts As Deprivation Of Assets?
- How Can Council Find Out About Deprivation of Assets?
- How Important Is Claimant’s Property For Care Home Fees?
- How To Reduce Assets To Avoid Care Home Fees?
- What Is An Assets And Income Assessment?
What Counts As Deprivation Of Assets?
When someone deliberately reduces their assets to avoid having to pay for care home fees and relying on the state to bear most (or all) of their care home expenditure, it is considered as “Deprivation of Assets”.
While most individuals consider that transfer of savings, selling of one’s property or gifting their home to a family member is all that counts as deprivation of assets, that is not all. Any of the following actions will be counted as deprivation of assets if it takes place within a short period of time prior to one’s claim for care home residency:
- To give away a large sum of money
- To transfer the title deed of one’s property
- To spend a large amount of money which is in contrast with the spender’s usual spending pattern
- To lose money through gambling
- To use savings in order to purchase items excluded from a means-test such as a car or jewellery
How Can Council Find Out About Deprivation of Assets?
While carrying out a financial assessment, local council authorities conduct their own investigations to confirm the data provided by claimants. If they find out that there has been a deliberate deprivation of assets, they have the authority to assign the proportion of the claimant’s contribution towards care home fees including the assets (whether cash in savings or property) that they have disposed of.
However, if the disposing of assets prior to care home residency is merely a coincidence and a care home claimant finds themselves incorrectly charged with deprivation of assets, they may challenge the decision of local authorities and file for an appeal. Some key facts and a list of suggested advisors are available here: Factsheet 40 – Deprivation of assets in social care
If the claimant has no savings or capital yet they are a homeowner, the council will consider recovering the expense from the proceeds of the sale of the house. This is called a deferred payment and may be considered when the applicant has a capital of around £23,250 (excluding the value of their house).
How Important Is Claimant’s Property For Care Home Fees?
One’s home is considered to be the most important part of capital when budgeting care home fees. While the residential property owned by a claimant is considered as capital, however, in case their house is occupied by any of the following, residents, the premises may not qualify to be accounted for in a means test:
- spouse/civil partner/unmarried partner
- a close relative over 60 years of age
- a close relative below 16 years of age (legal dependant)
- former spouse or partner if they are a single parent
This is called property disregard.
How To Reduce Assets To Avoid Care Home Fees?
If someone wishes to reduce their assets with the aim to reduce (or completely avoid) paying for their care home fees, they can use any of the following options:
- Care Annuity: This is an insurance policy that helps to pay for long-term care home expenses.
- Deferred payment schemes: These are schemes are offered by local authorities to serve as a convenient and flexible means to pay for long-term care home fees.
- Equity release: This includes the release of equity in one’s home to pay for care home fees.
- Rental income: This means to rent out one’s property with the aim to generate sufficient income to pay for care home fees,
What Is An Assets And Income Assessment?
Assets and income assessment is a means-based test conducted by local councils to calculate the amount of care home fee that a claimant will be able to contribute considering their financial status, as the council will be bearing the remainder of the expenses. For this purpose, the income, savings and capital of the claimant will be taken into account.
State Benefits such as Attendance Allowance and Pension Credit will be counted as income. However, in the case of Disability Allowance, there will no accountability for the same.
Based upon the financial assessment of claimants, they will then be categorised into one of the following slots so that local authorities may decide upon the claimant’s contribution towards their care home fee as well as the amount due on the state:
- If someone has savings over £ 23,250, the claimant will have to bear the entire cost of the care home fees
- If someone has savings of £14,250–£23,250, the claimant will have to contribute most of their weekly income towards care home fees. They will also pay an assumed extra amount of £1 per £250 of capital that they have
- If someone has savings below £14, 250, the claimant will not be required to pay for their care home fees from this amount and will have to pay from their weekly income.
If the results of someone’s assets and income assessment reveal low income, low capital or low savings, council authorities will increase their contribution towards their care home fees. In some cases especially when an increase in the claimant’s income or assets is expected, even if the council bears their expense in the short term, they will design a recovery plan for the future.
If proven with corresponding evidence, deprivation of assets is a criminal offence bearing dire consequences on the individual who is responsible that may include anything from having their assets reassessed to being sent a magistrate’s order.
It is most advisable to solicit with a financial advisor to seek advice as well as discuss their options for benefits claim so that deprivation of assets may be completely avoided.
FAQs: Is Deprivation Of Assets A Criminal Offence?
What constitutes a deprivation of assets?
When someone deliberately reduces their assets to avoid having to pay for care home fees and relying on the state to bear most (or all) of their care home expenditure, it is considered as Deprivation of Assets.
What is the time limit on deprivation of assets?
Unlike inheritance tax, there is no time limit on deprivation of assets. While conducting financial assessment for care home fees payment, local council authorities can go as far back as they deem fit to analyse spending patterns of the claimant.
What counts as deprivation of capital?
When someone deliberately reduces their capital (including investments and savings) with the intention of becoming eligible for and being able to increase their claim on state benefits, it is termed as deprivation of capital.
Can I put my house in trust to avoid care fees?
If you put your house in a trust or gift it away, it will be inquired upon during your financial assessment for care home fees. If the local council are able to prove this ac as a deprivation of assets, the property will be reclaimed by them and will be included in your financial assessment.
What is not classed as deprivation of assets?
A reduction of assets to pay off debt, purchase a house or improve one’s living standards will not be classed as deprivation of assets. Also, one should be certain of sound mental and physical health at the time of this and have no intention to reduce assets to avoid care home fees.
Deliberate Deprivation of Assets
Factsheet 40 – Deprivation of assets in social care
How to protect my property against care home fees
Gifting assets or property to avoid care fees
Deprivation of assets | Social care means tests
Financial Assessment for Care Home Fees Explained – carehome.co.uk
Who Pays for What in 2021/22? – carehome.co.uk advice
Paying care home fees | Social care means tests
Paying for your own social care (self-funding)
Paying your own care costs if you’ve used all your savings
How To Avoid Selling Your Home To Pay For Care…
Do I have to sell my home to pay for residential care?
Paying for permanent residential care | Paying for a care home