Wednesday, 22 February 2017

The Pitfall of Gifting Assets

It's no secret that there is a care crisis in the UK.  Council tax is increasing in most areas to help cover the cost of social care.  In order to reduce their care liabilities, older people may consider giving away their assets to loved ones. However, where such gifting is concerned, there are strict rules which must be followed.

If you have savings and assets worth more that £23,250 in England or, a weekly income high enough to cover care fees, then you will not be eligible for local authority funding.  In other words, you will have to pay for your own care. You may therefore consider gifting your assets away to reduce the value of your assets to bring yourself within these limits.
Deliberate deprivation
It's not easy to hide the fact that you may have tried to give your property away to your children or grandchildren. Local authorities will carry out a financial assessment, looking not only at your current assets, but also those you have previously owned.

If they believe you have given away assets intentionally, in order to qualify for funding from the local authority, they may find that you have indulged in "deliberate deprivation".  This may include selling assets for less than their true value, as well as giving them away.

What makes it deliberate?
To determine whether the disposal of assets was deliberate, the local authority will look at a number of things.  These include:
-  what your apparent motive was
-  the timing of the gift (i.e. the time between you realising your need for care and when you disposed of the asset)
-  the amount of assets involved.
For example, they are less likely to investigate you if you give away £500 than if you are handing over £50,000.

If it is found that you have deliberately deprived yourself of those assets, even if you no longer own them, their value may be considered in the financial assessment.  If the local authority does fund someone's care costs, and later discover that the individual deliberately deprived themselves of assets, they can pursue the person the asset was transferred to, in order to recover some of those costs.

It is possible to protect assets for the next generation without falling foul of the deliberate deprivation rules but, it requires early and careful planning.  A professionally written Will is essential.

For more information and advice about this complex area, call Jennifer Slater at Hansford Bell Law in Tavistock on 01822 619805 to make an appointment either in the office or at home.

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