There is no hard and fast rule here and the answer will depend on the circumstances at the time the money was given away.
If there is still enough money left for the parent to fund their own care fees (i.e. the remaining capital is considerably over the means-testing threshold), then the gift should have little or no bearing. If, however, the parent has no real capital left then the gift could have real implications.
When asked to fund a person’s care fees the local authority will pose a series of questions to determine financial means. One of the first being “do you own a property?”, if the answer is no, then the next question is usually “did you ever own one?”, if the answer to that is yes, then the local authority can - and will - ask when it was disposed off, how much for and what happened to the proceeds.
It is the answers to the subsequent questions that may alert them to suspect what’s known as ‘deliberate deprivation’. For instance, it will depend on how long ago the gift was made, why it happened and the health and age of the donor. If the gift was made say, ten years ago by a parent who was fit and healthy and who had no reason to suspect that they would ever need care to a child in desperate need of funds, then the motivation behind the action is unlikely to be that of deliberate deprivation.
If however, the gift was made by an aged parent who had already received diagnosis of a degenerative condition and/or was poorly or frail at the time to a child with their own means, then no matter how much time has elapsed since, circumstances would suggest that the transfer was suspicious and likely to fall foul of the deprivation rules. If the local authority suspect deliberate deprivation, they can (and do) use the powers of the Insolvency Act to investigate as far back in time as they want.
If the local authority rule in favour of deliberate deprivation, then they are well within their rights to either, 1) insist that the gifted money is returned to the parent, or 2) if it has been spent, they will call the amount “notional capital” and decline to contribute to the parent’s care fees until the value of the “notional capital” has been exhausted.
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