Understanding the Challenge
Nobody wants to see a lifetime of hard work and savings disappear in a flash because of care fees. It’s completely understandable to want to protect your home and nest egg for your loved ones. However, if you take the wrong steps at the wrong time, you could trigger the deprivation of assets rules. This can undo all your careful planning.
What is Deprivation of Assets?
Deprivation of assets occurs when the local authority believes you’ve deliberately reduced your wealth to avoid paying for your own care. They can still treat you as if you own the assets, even if you’ve given them away.
Common examples include:
- Gifting your home to your children when you already need care or are likely to need it soon.
- Selling your property for much less than its worth to a family member or friend.
- Moving large sums into someone else’s account just before a care needs assessment.
- Giving away investments or valuable possessions without receiving full market value.
Deprivation of Assets – 3 Things People Get Wrong
1) “If I give my house to my kids, it’s safe.” Not if you already need care (or are likely to soon) – the council can still treat it as yours.
2) “I can sell my home for £1 to my son.” If it’s under market value and done to avoid care fees, it’s a deprivation of assets.
3) “It’s fine to move my money into my daughter’s account.” If it’s just before a care needs assessment, it’s almost certain to be challenged.
Toucan Law Tip: Plan early, plan legally, and protect your assets without the risk.
How Local Authorities Decide
When investigating, the council will look at:
- Timing – Was the transfer or gift made close to when care was needed or anticipated?
- Intention – Was avoiding care fees the main reason, or was there another legitimate purpose?
- Pattern – Is there a history of giving away assets, or was this a one-off?
If they decide it was a deprivation of assets, they can still assess you as if you still had the money or property. This means you’ll be expected to pay towards your care as if nothing had been given away.
Legitimate Ways to Plan Ahead
The key is to plan early, ideally when you’re healthy and independent, and as part of a wider estate planning strategy.
Protective Property Trust Wills
These allow you to protect at least half the value of your home for your chosen beneficiaries if your spouse or partner later needs care. For example, if you own your home jointly and you pass away first, your share can be placed in trust for your children. This allows your partner to live there for life. If they later go into care, only their share can be assessed.
Flexible Life Interest Trusts (FLITs)
These provide an income and use of assets for a spouse or partner during their lifetime while ring-fencing capital for other beneficiaries. FLITs can also help with tax planning and asset protection.
Making Gifts as Part of a Long-Term Plan
If gifting is part of your normal pattern of giving and done many years before care is needed, it’s less likely to be challenged. For example, giving modest annual gifts to children or contributing towards grandchildren’s education well before any care needs arise can be beneficial.
Reviewing Ownership Structures
Changing how you own your property – from joint tenants to tenants in common – can create planning opportunities without falling foul of the rules. This must be done correctly and in advance.
Buyer Beware – The Risk of Expensive Trust Schemes
Some advisers market high-cost Trust arrangements as a guaranteed way to protect your home and savings from care fees. Before signing up, be aware:
- They can have serious Inheritance Tax consequences, including the loss of allowances such as the Residence Nil Rate Band and triggering a charge to Inheritance Tax upon creation.
- They may cause practical problems if you later want to sell your home or access equity release.
- Many appoint themselves as professional trustees, locking you into long-term, high fees that drain the very assets you were trying to protect.
The takeaway: If something sounds too good to be true, it probably is. The safest approach is tailored, legitimate planning done early, with full transparency about the tax and practical implications.
Toucan Law Tip
The earlier you plan, the more options you have. Last-minute gifting is almost always risky – but early, strategic planning can work beautifully. A well-structured plan can protect your home, keep you in control, and give your family peace of mind.
Why Work with Toucan Law for Care Home Fee Planning?
We specialise in care home fee planning that’s realistic, compliant, and tailored to your circumstances. No gimmicks, no risky loopholes – just thoughtful, legally sound strategies to safeguard what matters most.
If you want to explore your options without falling foul of the deprivation of assets rules, let’s talk.
📞 Call us or arrange an appointment – in person, online, or at home.
