Transferring ownership of a property may seem like an ideal solution to the problem of funding private care fees but there are several facets to consider, including other amounts of capital, the possible restrictions in choosing future care and also reactions of the Local Authority.
When asked to fund a person’s care fees the Local Authority will ask a series of questions to determine financial means. One of the first being “do you own a property?”, if the answer is yes, they will go on to ask “how do you own it?” If other people are named as owners, then the next question will invariably be “when did the transfer occur and why?”
It is the answers to the subsequent questions that will alert them to suspect deliberate deprivation or not. For instance, it will depend on how long ago the transfer was made, why it happened and the health and age of the donor (i.e. your mother). For instance, if the transfer was made say, ten years ago by a parent who was fit and healthy, with no reason to suspect that care was ever going to be needed, then the motivation behind the action is unlikely to be that of deliberate deprivation.
If however, the transfer was made by an aged parent who had already received diagnosis of a degenerative condition and/or was poorly/frail at the time, to a children 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 LA rule in favour of deliberate deprivation, then they are well within their rights to class the monetary value of the transferred asset as “notional capital” and decline to contribute to the parent’s care fees until the value of the “notional capital” has been exhausted.
Caution should be exercised with the transferring of any asset, but more so when it is a person’s house. Independent advice should be sought both financially and legally before any such transaction is conducted.
It is important to note that this answer is specific to care fees and does not relate to the rules on Inheritance Tax, which currently state that if the donor survives for seven years (or more) after the gift/transfer was made, any liability to IHT is mitigated. This is not the case for the payment of care fees, and if the LA suspect deliberate deprivation, they can (and do) use the powers of the Insolvency Act to investigate as far back in time as they want.
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