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Ombudsman offers guidance on capital deprivation disputes in England

The Local Government and Social Care Ombudsman (LGSCO) has issued guidance to English councils on making decisions on whether someone has deliberately deprived themselves of assets to avoid paying residential care home fees. 

 Disputes regularly arise when a person who goes into long-term care has previously given away or otherwise disposed of assets, thereby affecting the means-testing of their contribution to their care fees. The local authority responsible for providing care must take account of this intentional ‘deprivation of capital’. The test applied by public authorities for these anti-deprivation provisions is whether a benefits claimant deprived themselves of capital for the significant operative purpose of securing entitlement to the benefit, in which case the ‘notional capital’ would continue to be taken into account for means-testing. Placing assets into trust can also be deemed to be capital deprivation if done in order to secure the benefits in question, as demonstrated in the England and Wales Court of Protection case of Re LMS (2020 EWCOP 52). 

 Such decisions are often ‘very nuanced’ but are not always made equitably, says the LGSCO. Sometimes local councils wrongly assume that all gifts are deprivation of capital, or they may wrongly apply the personal expenses allowance to people who fund their own care. In many cases, they have not kept proper records of how their decisions are reached, says the LGO. 

 The ombudsman said decisions about whether people have intentionally deprived themselves of capital can be a difficult issue and emotive for the families involved. The issue has become more contentious as pressures on council budgets increase and the number of people in need of care continues to grow. The ombudsman’s guidance is aimed at financial assessment practitioners in local authorities to make decisions fairly and to justify them. It uses casework examples to demonstrate the points commonly raised in complaints received by the ombudsman. 

 The guidance warns councils that they should not simply assume that the person has deprived themselves of an asset with the intent of reducing what they should pay towards their care and support. They should first fully explore whether there are other valid reasons why someone no longer owns an asset and should ask the service user or their representative for their version of events before making decisions on deprivation of capital. The council should also bear in mind that a decision of intentional deprivation of capital requires the service user to have had a ‘reasonable expectation’ they may need to pay towards that care and support at the time of the deprivation. The timing of the disposal of an asset can thus help inform a decision about the person’s motivation for disposing of it, says the guidance. 

 However, local authorities are under a duty to act where they suspect deliberate deprivation has taken place. ‘Councils rightly expect that all those who can afford to contribute financially to their own care actually do so in accordance with national and local charging policies’, commented David Fothergill, chairman of the Local Government Association’s Community Wellbeing Board. ‘If people try to avoid paying for their care, this ultimately puts further pressure on the system and the taxpayer, and it is unfair to those who do make the expected financial contribution.’ 


If you would like advice about Longterm care issues or Wills contact Helena Grady on 0114 2588899.  Helena is a Solicitor and member of the Society of Trust and Estate Practitioners (STEP) with many years’ experience.  She can advise in relation to all elderly client issues.     

Fogwill & Jones Legal Services Limited is an independent niche law firm that trades alongside Fogwill & Jones Wealth Management. The businesses are entirely separate and regulated by different bodies.  The only connection is that they are both owned by Colin Fogwill.  The benefit to our clients is that when financial advice is needed alongside legal advice, these services are available at one location.