Deliberate deprivation of assets: what you need to know

Deliberate deprivation of assets occurs when someone gives away money, property or other valuables to reduce the value of their estate.

This most often becomes an issue when a person is assessed by their local authority to determine how much they must contribute towards the cost of care.

If the local authority believes that a transfer was made to avoid paying care fees, it may decide that deliberate deprivation has taken place. This can have serious financial and legal consequences.

Why do people give away assets?

People often make gifts for entirely understandable reasons – to help family members, to pass on wealth during their lifetime, or as part of long term estate planning. Others may hope that reducing their assets will lower the amount they need to pay for future care.

However, even well intentioned gifts can cause problems if they are later scrutinised during a financial assessment for care.

How deliberate deprivation is assessed

Local authorities are entitled to look closely at gifts or transfers, even if these were made years before care was needed. They will consider factors such as when the transfer took place, the person’s health at the time and whether they could reasonably have anticipated needing care.

If the authority concludes that the transfer was made to avoid care costs, it can treat the person as if they still owned the asset. This means care fees may be calculated on the basis of assets that no longer exist, potentially requiring the person to meet care costs they cannot afford.

What are the consequences?

Where deliberate deprivation is found, the local authority can disregard the gift when calculating care fees. This may leave the individual without sufficient funds to pay for care and can result in a debt to the authority. In some cases, steps may even be taken to recover money from the person who received the gift.

These situations can be extremely stressful and may lead to financial hardship or legal action.

The importance of professional advice

Before giving away assets or transferring property, it is vital to seek independent legal and financial advice. Proper advice can help you understand the potential impact on future care costs and ensure  decisions are carefully documented.

Attorneys and deputies have additional responsibilities. Under the Mental Capacity Act 2005, they must act in the person’s best interests and take professional advice before making gifts. Failure to do so can
result in personal liability and legal consequences.

Giving away assets does not guarantee lower care costs and can create serious issues later. Taking advice early can help protect your position, reduce risk and ensure your care needs, or those of a loved one, are properly planned for.

How can Morr & Co help?

If you have any questions or would like any further information on the content of this article, please do not hesitate to contact our Court of Protection team, who will be happy to help. Or email info@morrlaw.com or call us on 0333 038 9100 and one of our team will be happy to assist.

Disclaimer
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.