Giving away assets

Many people, on coming to need care, consider giving away assets or selling them at a lower value than their true value in order to qualify for local authority contributions to the cost of their care. However, you should not knowingly do this: it is called 'deliberate deprivation' of assets.

The Department of Health's Charging for Residential Accommodation Guide (CRAG) gives the following examples of deprivation (although not necessarily for the purpose of avoiding a charge for accommodation):

• A lump-sum payment has been made to someone else (e.g. as a gift or to repay a debt)
• Substantial expenditure has been incurred (e.g. on an expensive holiday)
• The title deeds of a property have been transferred to someone else
• Money has been put into a trust which cannot be revoked
• Money has been converted into another form which would fall to be disregarded (e.g. personal possessions)
• Capital has been reduced by living extravagantly (e.g. gambling or following a much higher standard of living than the resident could normally afford)
• Capital has been used to purchase an investment bond with life insurance. Councils will wish to give consideration, in respect of each case, to whether deprivation of assets has occurred i.e. did the individual place his capital in such an investment bond so that it would be disregarded for the purpose of the Assessment of Resources Regulations.

Health and Social Services and Social Security Adjudications (HASSASSA) Act 1983 states that where a resident has deliberately deprived himself of an asset the local authority can recover any sums which it consequently has to pay towards the resident's care costs from the person who the asset was transferred to. This power can only be used if the deliberate deprivation occurred within six months of the resident approaching the local authority for funding. However, it does not matter how long ago an asset was given away: there is no time limit restricting the local authority from taking this asset into account and assessing you as having "notional capital"; it can then assess your contribution to the cost of your care as if you still owned the asset.

Of course it could also reduce the choice you have if you wish to move to a more expensive care home in the future.

We strongly recommend that you take professional advice before giving away or transferring away any assets.