The Local Government and Social Care Ombudsman has issued guidance to Councils on the often complex issue of deprivation of capital decisions.
What is deprivation of capital?
Deprivation of capital is when someone knowingly reduces their capital for financial benefit. When Councils are carrying out financial assessments to work out how much people should pay for their care, they must sometimes make nuanced decisions about whether someone has given away money, or deprived themselves of an asset, with the intention of avoiding charges for care.
If a Council decides that deliberate deprivation has taken place they can include the capital within the financial assessment as a ‘notional capital’ amount, i.e. as if the person still owned it.
Deprivation of capital: guidance for adult social practitioners
Based on lessons from the complaints it receives, the Ombudsman’s guidance is aimed at financial assessment practitioners in local authorities. It sets out the Ombudsman’s approach to investigating complaints from people whose local authority has decided they have intentionally deprived themselves of capital when assessing how much they should contribute to their care fees.
Using casework examples, the guidance highlights the common issues seen in the complaints the Ombudsman receives. These include cases where Councils have:
- Not followed the law and guidance by considering the motivation or intent behind why someone has deprived themselves of an asset
- Wrongly applied the guidance on the personal expenses allowance to people funding their own care
- Treated all gifts as deprivation
- Failed to calculate notional capital correctly
- Failed to explain the reasoning behind decisions and/or not properly recorded how a decision was reached
Case study considered by the Ombudsman
One case study looked at Mr M who had dementia and the Council had arranged support to meet his care needs. His daughter, Mrs P, had Power of Attorney to manage his property and affairs. When the Council assessed his finances to see how much he could afford to pay towards the cost of his care, it decided he could pay the full cost as he had an investment bond with his wife worth £85,000.
Mrs P told the Council the investment bond was solely owned by her mother, Mrs M, so should not be included in her father’s financial assessment and provided evidence of this. The Council questioned whether Mr M had given his wife money to help buy the investment bond. It told Mrs P, if that was the case, Mr M would have deprived himself of capital to avoid care costs. It asked for additional evidence, which Mrs P’s mother refused to provide.
During the appeal, the Council was found to be at fault for asking Mrs P to provide information about her mother’s finances when it was assessing her father’s finances.
The Council agreed to reconsider the matter by requesting further information about Mr M’s finances.
Good practice for Councils
The guidance provides good practice for Councils, including:
- Carefully consider what capital belongs to the person needing care and therefore can be taken into account
- Carefully consider the value of the capital
- Make enquiries about any disposals
- Ensure there is a clear record of the factors considered
- Provide a written decision, including the reasons for deciding there was a deprivation
How we can help
At Nelsons, we can help ease the worry of residential care home costs by helping you with your residential care planning. We can advise on the many options available, which include transferring ownership of your property, inheritance tax planning, investment advice and management, and NHS care fee funding applications and disputes.
If you require any advice in respect of residential care home planning and your finances, please contact either our Wills, Trusts & Probate team or Zoe Till from our Investment Management team on 0800 024 1976 or via our online enquiry form.
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