Asset deprivation trap!
Two years ago Mr. and Mrs. B gifted their home to their son having been advised that to do so would ensure the property could not be used for long-term care costs. They still reside in the property. The couple are in the mid-eighties and Mrs. B. at the time, had the onset of dementia which has now become so bad she needs to go into care. The financial assessment concluded half of the property value should still be assessed for care costs.
On both the intention and timing rules of asset deprivation, [Care Act 2014] the local authority concluded asset deprivation had taken place and, if Mrs. B cannot pay her full care fees as assessed, the local authority have the authority to pass the debt to the son and if he fails to pay, can take enforcement action against him.
This common occurrence shows the importance of obtaining correct professional advice before doing anything. Had the property not been gifted away, it’s value would have been disregarded in the financial assessment by the local authority because with Mr. B still occupying the property, a mandatory disregard would apply to it. Only Mrs. B’s income [less the personal allowance] and savings in excess of £23,250 could be used to pay her care costs, which once savings fall to under that level reduces dramatically based on notional income.
The family thought transferring the property back into the parent’s names would overcome the problem, but with Mrs. B now lacking capacity she would be unable to sign the transfer documents. The other issue that arises is if the transfer did go ahead, the local authority could claim asset deprivation, if Mr. B tried to rely on the mandatory property disregard rules [care Act 2014] and the local authority need to contribute toward care costs.
In short, trying to rectify the initial error could create an even greater problem.
If you have problems finding your way through the minefield of legislation and case law go to whopays4care at Facebook and follow the links to our easy to read book “What you need to know about Long-term Care”.
Specialist long term care adviser, public speaker, trainer and author.
7yUnfortunately Jan the man in the pub knows best....only when its too late do families realise he was wrong.
Wills and Probate Legal Executive at J M Wills and Legal Services Limited - 0115 7522196
7yI see this all too often as well, if only our clients would take professional advice on this delicate area of law, but instead they listen to the man next door, or the man down the road did it so I should do it.
Helping to look after you and your loved ones today and tomorrow! Dementia Friend - Partner, Paralegal at Apprise Legal, STEP Affiliate.
7yEvery adviser should have a copy of the book in their briefcase, so they always have this valuable tool to hand, excellent book!