If you gift your home to adult children, will the Local Authority always call it a deprivation of assets?

If you gift your home to adult children, will the Local Authority always call it a deprivation of assets?

Whether you are considering retirement plans in your 60’s or updating your will in your 80’s, paying for potential future care costs is a concern for many people. Estate planning has been a topic issue in the news, with changes to Inheritance Tax rules in 2017 and the hike in probate costs from April 2019. What’s clear is that there are many aspects to consider when thinking about what we leave behind once we die, including transfers, trusts and gifts.

There are many ‘asset protection trusts’ being marketed to the public. Some advise retired parents to transfer the legal ownership of the marital home to their adult children. In these circumstances, the trust would hold the legal title to the home. For inheritance tax purposes, this could protect the property from being sold to pay for care, even if the parents end up moving into a care or nursing home in the future. 

It’s vital to be wary of advice concerning gifting away assets, or transfer of assets by trusts, as this might be outside of Local Authority care funding rules. If following this type of asset protection advice, there is the risk of being accused of deliberately depriving yourself of assets, to avoid paying for your care.

Legitimate inheritance tax planning and trusts advice is sensible and necessary. However bespoke advice is needed by anyone making a substantial gift or property transfer where paying for care may also be an issue.

There are many legitimate reasons for transferring money or property between family members. However, we frequently see such gifts leaving elderly people without sufficient funds to live on in their retirement or, in the worst cases, without a home at all.

How to avoid being accused of deliberate deprivation

The rules are laid out in statutory guidance, but essentially it would be unreasonable to view a gift or transfer as “deliberate deprivation” if a person:

  • is fit and healthy at the time of the disposal; and
  • has no reasonable expectation of the need for care and support; and
  • has no motivation to avoid care and support charges, i.e. where there is a legitimate reason for transferring an asset to another person.

If these requirements are not met by the donor of the gift, the Local Authority is likely to suspect that care fee avoidance was the motivation behind making it.

Legal advice should always be sought before making any substantial gift or transfer of property. It is vital you understand the risks and are making an informed decision which also protects your position should you or your partner require care and support in the future.





Chloe Scarr

Chloe Scarr

Associate Solicitor in the Community Care Law team at Martin Searle Solicitors

Chloe is a full accredited member of Solicitors for the Elderly (SFE). She is an expert in representing individuals to challenge health and social care decisions contained in care plans, care provision and disputes regarding the paying for care rules under the Care Act 20

Chloe acts for individuals in financial and welfare Court of Protection matters including safeguarding adults at risk, mental capacity law, Deprivation of Liberty Safeguards and contested Lasting Power of Attorney and Deputy Applications. 

Chloe offers case work support for professional Deputies and Attorneys and private client solicitors and leads the firm’s Services for Professional Deputies.

She is an experienced trainer in Community Care Law for MBL, a leading provider of legal accredited CPD training courses. Chloe also provides training for local and national organisations, charities and law firms.

Martin Searle Solicitors is an award-winning law firm providing specialist legal advice and support in Employment Law for employers and employees, as well as expert guidance and legal advice in Community Care Law. In 2016, they won The Law Society Excellence Award for Excellence In Business Development for their Services for Professional Deputies and Attorneys.