Care Fees Update – A lifetime gift does not necessarily constitute a deprivation of assets
In a recent decision by the Local Government and Social Care Ombudsman in West Sussex County Council (18 007 203). The ombudsman found that West Sussex County Council was at fault in how it considered the issue of deprivation of assets in relation to a life-time gift and should accordingly conduct a further review of it’s decision. In this case the local authority found that Mrs B had deprived herself of £140,000 with the intention of avoiding care home fees by making a life-time gift for this amount to her Mrs B suffered a stroke in 2013 and was unable to live independently. As such she moved into an annex of her daughter’s home. As Mrs B was unable initially to sell her home her daughter paid all her community care costs and day to day living expenses. Mrs C also having funded the costs of both physiotherapists and acupuncture therapists for her mother. Mrs B had a sizeable package of care comprising of 4 carer visits a day which the local authority commissioned. As Mrs B had twenty-four hour care needs it was arranged that her 4 daughters would meet these additional needs over and above the 4 care calls a day. The vast majority of the care fell to Mrs B’s daughter Mrs C. As Mrs C ran a small business and as such did not have enough time to meet all of Mrs B’s needs. She employed casual carers to provide additional care to Mrs C in addition to paying all of her mother’s day to day living costs. As Mrs B had capital in excess of the upper capital limit of £23,250 she also funded her own package of care. Mrs B could initially sell her former home to release captial as this was owned with Mrs D.
However in early 2015 Mrs B and Mrs D sold the former home. Mrs B receiving her share of the proceeds of sale. Her solicitor visited her at Mrs C’s home where another one of Mrs B’s daughters was present i.e. Mrs E. The solicitor witnessed Mrs B signing a letter stating that she wished to make a lifetime gift of £140,000 to Mrs C . The gift comprised of a sum of £2,000 per week which was backdated to 2013 in recognition of the physical, emotional and financial support Mrs C had given to Mrs B. Following completion of the sale of the property a sum of £140,000 was transferred into Mrs C’s account. Following a financial assessment of Mrs B in 2018. Mrs C requested as Mrs B’s finances were close to the upper capital limit that the council complete a financial assessment. The councils having completed the said financial assessment decided that the lifetime gift of £140’000 was a deliberate deprivation of assets to avoid care fees. The council accordingly treated this lifetime gift as notional capital for the purposes of its financial assessment. This meant that the council treated Mrs C as if she still has the said capital. Mrs C instructed solicitors who appealed the decision and provided bank statements showing payments and cash withdrawals by Mrs C for both care costs for her mother Mrs B in addition to other expenses. A tenancy agreement signed by Mrs B to rent the annex was also produced although rent was never paid due to Mrs B’s lack of liquid capital assets. It was submitted on behalf of Mrs C that the council should not therefore have treated the gift as notional capital. The council subsequently agreed that the amounts spent on formal care by Mrs C for Mrs B did not amount to a deprivation of assets. However these case costs totalled a maximum of £450 per week leaving the remaining £1550 per week unaccounted for in the council’s view. The council maintained that there was insufficient evidence provided by Mrs C that the other expenses totalled up to the gift of £140,000. The council also queried the tenancy agreement and other payments such as one for £10,000 in respect of maintenance on Mrs B’s former home.
The ombudsman was clear in its decision that the council was at fault in how it has considered the issue of any deprivation. Whilst a lump sum payment had been made by Mrs B to her daughter Mrs C the ombudsman stated that it must not assume that this was to avoid Mrs B paying care fees. The ombudsman said that whilst the Council cannot look into the person’s mind at the time of any lifetime gifting. It must consider certain factors such as the timing of the gift and whether the person had a reasonable expectation of care needs.
The ombudsman being of the view that it was clear in this case that Mrs B did have a reasonable expectation of care needs, as she needed 24-hour care for up to two years before the transfer of money. It was therefore for Mrs B’s representatives to provide evidence her intention was not to avoid paying for care.
The Council also said that there was little evidence Mrs B had any intention to reimburse Mrs C for her care and daily living costs. It said that there was no evidence she discussed this with her solicitor.
The ombudsman stated that it was reasonable for the Council to question whether there was enough evidence of Mrs B’s intention to reimburse Mrs C. It was also reasonable for it to question how the individual expenditures match up to the lump-sum of £140,000 gifted to Mrs C. It not being for the Ombudsman to question the Council’s decision if it had properly considered all this information. The Ombudsman however found that the Council had not set out its rationale clearly for finding that a deprivation of assets had taken place.
This being specifically in relation to the Council’s concerns that there was only evidence Mrs C spent £150 to £450 per week on care. Mrs C had provided evidence in the form of bank statements, invoices from carers, a spreadsheet of expenses and a tenancy agreement in support of the money spent by her on Mrs B to reimburse her for expenses. The total of the expenses listed was around £120,000. The Ombudsman found this to be closer to the £2,000 a week figure than the Council identified from its financial assessment.
The Ombudsman found that the Council had not outlined in detail why it considered that these and other documents did not provide evidence Mrs B’s intent was to reimburse Mrs C, rather than avoid paying care fees.
The Ombudsman found that the Council could only look at the timing of the disposal and any evidence provided by Mrs C. It not being for the Ombudsman to question the Council’s decision, if it had properly considered the evidence. The Ombudsman found that the Council had not properly considered the evidence which Mrs C had provided and was at fault in determining that the lifetime gift constituted a deprivation of capital.
Since the ombudsman’s decision was made West Sussex County Council have introduced a formal deprivation of assets panel to consider the merits of each case on an individual basis.
When determining whether a lifetime gift or indeed a transfer of any assets constitutes a deprivation of assets Councils should therefore firstly consider paragraphs 6 & 7 of Annex E of the Care and Support Statutory Guidance which says that:
6) Deprivation of assets means where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they are charged towards their care. This means that they must have known that they needed care and support and have reduced their assets in order to reduce the contribution they are asked to make towards the cost of that care and support.
7) Where this has been done to remove a debt that would otherwise remain, even if that is not immediately due, this must not be considered as deprivation.
Thereafter Councils should go onto consider paragraphs 11 and 12 of Annex E which says that:
11) There may be many reasons for a person depriving themselves of an asset. A local authority should therefore consider the following before deciding whether deprivation for the purpose of avoiding care and support charges has occurred:
(a) whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; at the point the capital was disposed of could the person have a reasonable expectation of the need for care and support?
(b) did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs?
12) For example, it would be unreasonable to decide that a person had disposed of an asset in order to reduce the level of charges for their care and support needs if at the time the disposal took place they were fit and healthy and could not have foreseen the need for care and support.
The length of time between disposal and the application of the financial assessment is a relevant factor for the Council to consider in respect of any deprivation of capital. In the Scottish case of Yule v South Lanarkshire Council (2001) 4 CCLR 383 it was held that a local authority was entitled to take account of the value of an elderly woman’s home which was transferred to her daughter over 18 months before she entered residential care. A good starting point for any local authority seeking to determine whether a deprivation of assets has taken place is to follow the guidance as set out from the Yule judgement as set out below which whilst not binding is persuasive and often cited:
A local authority requires evidence before it from which it can be reasonably inferred that the deprivation of capital took place deliberately and with a purpose of the nature specified. The local authority cannot look into the mind of the person making the disposition of capital or of others who may be concerned in the transaction. It can only look at the nature of the disposal within the context of the time at which the circumstances in which that disposal took place.