Deprivation of assets: What does this mean?

When the subject of care charges comes up in conversation I am often asked what can be done to protect assets. Understandably, families want to preserve as much as possible for future generations. But it’s important to take advice before you do anything because giving away money or property to avoid care fees could be seen as “deprivation of assets.”

What Is Deprivation of Assets?

Deprivation of assets happens when someone intentionally reduces their wealth by giving away money, transferring property, or selling something for less than it’s worth to avoid paying for care.

This might include:

• Giving your home to your children

• Transferring large sums of money to relatives or trusts

• Buying expensive gifts

• Selling assets below market value

  
  

If a local authority believes this was done deliberately to avoid care fees, they may treat the asset as if it’s still yours when they assess your eligibility for financial help. That means you might still be expected to contribute to your care costs as though you hadn’t given the asset away.

How Do Local Authorities Decide?

It’s all about intent and timing. The local authority will consider:

• Why the asset was transferred. Was it to avoid care fees or for another valid reason?

• When the transfer happened. Was it at a time when you could reasonably have expected you’d need care?

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For example, if someone gave away their home five years ago while they were healthy and living independently, and there was no indication of needing care, it may not be considered deprivation. But if the gift was made after a diagnosis or at a time when care was foreseeable, that’s a red flag.

What Can Happen if Deprivation Is Suspected?

If the local authority concludes that deprivation of assets has occurred, they can:

• Include the value of the asset in your financial assessment, even though you no longer own it

• Refuse financial support until your deemed capital drops below the threshold

• In some cases, ask the recipient of the asset to contribute towards your care costs (though this is complex and not always enforceable)

  
  

Are There Legitimate Ways to Plan Ahead?

There are may ways to plan for the future but it has to be done correctly. If you see a company promising to protect your assets so you never need to pay for care you need to be very careful before you get involved with any scheme they offer you. Be guided by the saying "if things look to good to be true, they usually are!" To get the best advice I would recommend:

• Seeking advice from a specialist lawyer or financial adviser before making any major decisions

• Setting up lasting powers of attorney to help with future decision-making

• Exploring legitimate estate planning and trusts, but only where appropriate and not solely to avoid care fees

• Looking into care annuities or other financial products that can help cover future care costs

Gifting of assets

It’s completely understandable to want to protect your home and savings. But trying to move assets out of your name to dodge care home fees can backfire financially and legally. The rules around deprivation of assets are complex and case-specific, so professional advice is always your best first step.

Whether you’re planning ahead or already navigating care costs, knowing the rules can save you from a lot of stress and unintended consequences. Honesty, transparency, and timely planning are key and this is what the Argo team are best at!