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UK: Regular cash gifts did not prove deliberate deprivation of assets

Monday, 5 February, 2018

The Local Government and Social Care Ombudsman has criticised a local authority that refused to pay for an elderly woman's residential care fees, after it learned that she had made regular cash gifts to her family after being admitted to the care home.

The woman, referred to as Mrs Y, suffered a stroke in 2007 and, aged 80, had to go into residential care. At the time, she had assets of about GBP250,000, including her home, so was not eligible for local authority financial assistance under the so-called Charging for Residential Accommodation Guide (CRAG) rules. Mrs Y’s daughter sold her mother’s house, and used the proceeds to pay her care home fees. By January 2015, it had nearly all been used up, and Mrs Y's assets had fallen to the GBP23,250 threshold for local authority assistance in England. Her daughter duly applied to North Yorkshire County Council for financial help, and was granted it, pending completion of a full financial assessment. Consequently, North Yorks began paying the care home fees from January 2015, including a special extra rate charged by the home on top of the standard local authority rate.

But when the council came to do the full assessment, Mrs Y's daughter revealed that she, and other family members, had been receiving annual cash gifts from her mother since her admission to the care home until 2014, when her money ran out. The gifts – which she said were recommended by an independent financial advisor – amounted to nearly GBP75,000 in total.

The council took the view that this was deliberate deprivation of capital under the CRAG rules, which state that gifts to family can be treated as deprivation of capital if they are made with the intention of reducing the amount the person is charged for their care. It immediately stopped paying Mrs Y's care home fees and demanded repayment of the nearly GBP7,000 it had already paid. Mrs Y's family paid this back, but complained to the ombudsman about the council's behaviour.

The Ombudsman's office has now issued its findings. It decided that North Yorks took its actions without ever completing a full financial assessment, simply assuming without cause that the gifts were deliberate deprivation of capital. Moreover, its calculations on the amount of deprived capital were not backed up by any evidence, and it did not properly take into account the proven fact that there was already a pattern of gifting before Mrs Y went into the care home, with no evidence of any haste to dispose of her assets. Although the amount of the gifts increased after she went into care, the council did not provide any other evidence to show why it had decided the gifts were made with the intention of avoiding care charges. Mrs Y had paid the full amount of her care for nine years, and more than 70 per cent of her money has been spent on care home fees.

The ombudsman has now ordered the council to apologise, reassess Mrs Y's situation properly, and repay her any fees to which she is entitled.

'While I appreciate councils need to make difficult, nuanced decisions about whether people have deliberately reduced their assets, the guidance does state people with care needs are free to spend their money as they see fit' commented Michael King, the Local Government Ombudsman. 'Just because someone might be living in a care home, it does not mean they should not be able to spend their money on things other than their care, and this includes continuing to give gifts to friends and family.

'Given Mrs Y's prognosis when she entered the home, and after paying for her care for nine years, it is hard to see how the council concluded every penny she gave away was done with poor intentions', he added.

Mrs Y is still in the same care home, and pays all her monthly income towards the fees, but cannot cover the full cost. She now owes GBP30,000 to the home, which has said it will take 'further action' if the debt is not paid.

On 7 December 2017, the government announced that they had scrapped their plans to place a cap on what an individual would be required to spend on their own social care costs. The cap had originally been planned to be set at GBP72,000 for those over 65, and was due to come into effect in 2020. A green paper setting out the government's proposals for social care reform will be published by this summer.

Sources