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What is deprivation of capital?

The term deprivation of capital is commonly used when discussing care fees and funding. It describes an act carried out by an individual to knowingly reduce their capital for financial benefit to avoid paying for care fees. It is also used in the benefit system when individuals reduce assets to claim benefits.


When a local authority carries out a financial assessment they need to consider whether assets have been given away with the intention of avoiding charges for care. Sometimes actions are obvious and sometimes they are difficult to assess.


Many complaints received by the Local Government & Social Care Ombudsman arise because it is thought a local authority has automatically considered a gift to be deprivation of capital. This can be a very difficult and emotive issue for families.


With an increasing pressure on council budgets it is right for local authorities to ensure that deprivation of capital does not occur but they need to ensure they investigate correctly to reach the correct outcome.


Councils must not simply assume that deprivation of capital has arisen. They should fully explore whether there are other valid reasons why an asset is no longer owned. The circumstances of the gift and the reasoning for it should be investigated with the individual requiring care and their family or representatives. The councils have to bear in mind that the decision of intentional deprivation required the service user to have had a "reasonable expectation" they may need to pay towards care and support at the time of deprivation. The timing of a gift is therefore really important. If a gift was made when an individual was well and had no indication they may need care in the future they should not be considered deprivation of capital.


Gifting assets when you have been diagnosed with an illness is always a difficult area. There is an awareness of a condition but this may not always result in a care need in later life. If you are considering giving money away and you do have a health issue you should really take advice and make sure that it is done in the correct way with the right supporting paperwork, just in case it is called into question by a local authority.


If you are considering giving assets to family members and are not sure which way to go then give us a call for a quick chat. We are on 01622 843729.




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