October 9, 2017Councils actively pursuing deprivation of assets cases

House assets

Councils are actively pursuing those who have deliberately deprived themselves of assets in an attempt to avoid paying their own bill for care.

Tens of thousands of people have been duped into parting with thousands of pounds to set up so-called ‘Asset Protection Trusts’, also sometimes called ‘Lifetime Trusts’, ‘Lifetime Asset Trusts’, ‘Property protection trusts’ or ‘Estate preservation trusts’, to shelter their assets. Some have paid up to £10,000 for what Age UK describes as “effectively a worthless piece of paper”. Others have been incorrectly advised that transferring their property into the names of their children will help avoid a hefty care bill. But cash-strapped Councils are clamping down on such cases where those needing care have deliberately deprived themselves of assets.

When a person needs care and is not entitled to funding, a Local Authority will look at any savings they have including their home, to see if they can afford to pay for the care themselves. Those with assets worth £23,250 or more will be expect to fund the entire cost of care themselves, while those with assets between £14,250 and £23,250 will have to make a contribution. The Local Authority funds care for those with assets under the £14,250 although funding is severely limited and if a particular care home is preferred, the person requiring care will often have to make a contribution regardless of their limited means.

If a person gives away their assets to avoid care, either by transferring them into a Trust or by gifting them to another person, the Council has the power to consider whether such actions amount to ‘deprivation of assets’. If there is no other plausible reason for the transaction, the Council can treat the person as if they still have the asset and charge them care fees accordingly.

North Somerset Council

North Somerset Council has used its powers 64 times in the past five years to tackle deprivation of assets cases. Image credit: Wikimedia.

One Council in North Somerset has used this power 64 times in the past five years, saving £1.3 million in care costs which have been directly charged to those concerned.

A spokesman from the Council told the Weston Mercury that people ‘cannot expect North Somerset to fund their care if they have deliberately deprived themselves of assets’.

An investigation by The Telegraph suggests that some Councils such as North Somerset pursue care-fee-dodgers more aggressively than others. However, on this point the Council responded:

“It is not necessarily true that we use this power more than other authorities, possibly we have been better at recording the deprivation findings. The charging policy is applied fairly and those who should pay for their care do pay and other citizens should not be penalised.”

In some cases, the Council has demanded that the person who has transferred assets pay for the full cost of their care. In other cases, the Council notes that it will increase the amount they are assessed to pay but they will still receive some assistance.

In May 2015, trusts and estates body STEP reported that 8 people were jailed for selling Asset Protection Trusts, having been convicted amongst other charges of fraudulent trading.

The alternative to Asset Protection Trusts

April King has been advising clients for more than 25 years to avoid using so-called Asset Protection Trusts, and not to transfer their property to their son or daughter to avoid care fees. Instead, there is a legitimate, perfectly reasonable and entirely moral way to protect your share of the family estate from care costs.

Many couples hold their property as ‘joint tenants’ so that both own a 100% undivisable share. If one dies, the other continues to own 100% of the property. Neither party has a defined share that they can sell or leave in their Will whilst it is held as ‘joint tenants’.

An alternative approach is best illustrated by way of an example:

Dividing the house

Mr and Mrs Langdon own 2 Bardney Place as ‘Joint Tenants‘. This means they do not have a separate share of the property that they can leave in their Will.

They decide to sever the tenancy so that the property is instead owned as ‘Tenants in Common‘ in equal shares. Each then owns a 50% share of 2 Bardney Place.

Mr and Mrs Langdon make Wills with April King that gave each other a life interest in their share of the property. This means that when one dies, the other can stay in the property for life.

Mr Langdon dies. Mrs Langdon then owns her 50% of the property, and has a life interest in Mr Langdon’s share.

In her later years Mrs Langdon requires residential care and is not entitled to funding. The Local Authority therefore performs a means test to see if she can afford to pay for care herself. 2 Bardney Place is assessed to be worth £160,000 of which Mrs Langdon owns 50%. Mrs Langdon did not want to sell the house so the Local Authority placed a charge on the property to cover her care fees. However, this cannot be for more than 50% of the value of the property (her share) – Mr Langdon’s share cannot be touched as Mrs Langdon does not own it.

On Mrs Langdon’s death, Mr Langdon’s share of 2 Bardney Place passes to his children in accordance with the terms of his Will.

The above example shows that if a couple ‘severs the tenancy’ so each then holds a 50% share of the property as ‘joint tenants in common’, they can then leave their partner a life interest in their 50% share of the property on their death. On their partner’s death, the property goes to whoever they have named in their Will (it could for example go into a Bloodline trust for the benefit of their children and grandchildren). The advantage of this arrangement is that should their partner need care after their death, 50% of the property is protected from care fees. After all, why should they pay their partner’s care bill?

We charge just £240 + VAT per person for this type of Will. Book your free appointment with one of our experts – call us on 08700 120 130 or email info@aprilking.co.uk. Alternatively click here to order our free information pack without obligation. 

Find out more: Click here to read our full article on Deprivation of Assets which explains the powers that the Local Authority have.


Have your say:

Your email address will not be published. Required fields are marked *

Call us

Speak to us today

08700 120 130


Book your free meeting with one of our lawyers: with absolutely no obligation

Home visits available: where this is more convenient (no additional charge)

The next step: get in touch!


Fields marked with an * are required

April King - Norwich Office
Rowan House
28 Queens Road
Click here to view

April King - Dinnington Office
Matrix Business Centre
Nobel Way
S25 3QB

Click here to view

April King - Chester Office
Regus House
Herons Way
Chester Business Park
Click here to view

April King - Didsbury Office
Adamson House    
Wilmslow Road, Tower Business Park
M20 2YY
Click here to view

April King - Sutton Coldfield Office
High Street Business Centre
42a High Street
Sutton Coldfield
B72 1UJ
Click here to view

April King - Wakefield Office
Trinity Walk
Unit G37b
Market Walk
Click here to view

April King - Leeds Office
2 Wellington Place
Click here to view

April King - Harrogate Office
Copthall Bridge House
Station Bridge
Click here to view

April King - York Office
Tower Court
Oakdale Road
Clifton Moor
YO30 4XL
Click here to view

April King - Oxford Office
Prama House
267 Banbury Road
Click here to view

April King - Northampton Office
Victory House
400 Pavilion Drive
Northampton Business Park
Click here to view

April King - Milton Keynes Office
Regus - Milton Keynes Atterbury Lakes
Fairbourne Drive
Milton Keynes
MK10 9RG
Click here to view

April King - Coventry Office
The Quadrant Business Centre
3, The Quadrant
Warwick Road
Click here to view

April King - West Bridgford Office
Landmark Business Centre
Tudor Square
West Bridgford
Click here to view

April King - Melton Mowbray Office
Pera Business Park
Nottingham Road
Melton Mowbray
LE13 0PB
Click here to view

April King - Hinckley Office
The Atkins Building
Lower Bond Street
LE10 1QU
Click here to view

April King - Leamington Spa Office
Regus @Warwick Hilton
Junction 15, M40
A429 Stratford Rd
CV34 6RE
Click here to view

April King - Dudley Office
King Charles House
Castle Hill
Click here to view

April King - Edgbaston Office
April King
Avix Business Centre
42 - 46 Hagley Road
B16 8PE
Click here to view

April King - Redditch Office
April King
Greenlands Business Centre
Studley Road
B98 7HD
Click here to view

April King - Tamworth Office
Leonard House
12-14 Silver Street
B79 7NH
Click here to view

April King - Solihull Office
Kings Court
17 School Road
Hall Green
West Midlands
B28 8JG
Click here to view

April King - Mansfield Office
Chadburn House
Weighbridge Road
NG18 1AH
Click here to view

April King - Chesterfield Office
12 Albion Road,
S40 1LJ
Click here to view

April King - Leicester Office
60 Charles Street
Click here to view

April King - Warrington Office
Gilbert Wakefield House,
67 Bewsey Street
Click here to view

April King - Derby Office
College Business Centre
Uttoxeter New Road
DE22 3WZ
Click here to view

April King - Sheffield Office
2nd Floor
The Portergate
Ecclesall Road
S11 8NX

Click here to view

April King - Nottingham Office
Huntingdon House
278-290 Huntingdon Street
Click here to view