Giving Away A Property

Can a Parent give their home away to their children to avoid it having to be sold to pay Nursing Home fees?

The answer is "Yes" but it has to be done at the right time and in the right way. At least 6 months before going into care and preferably a bit earlier. And you have to retain the right to live in the property. That's important.

If you are thinking of doing this you have to use a solicitor who specialises in this kind of work and who understands the rules. At Sayer Moore & Co we are members of:

Solicitors for the Elderly ( SFE) A group of solicitors across the country who specialise in the law as it applies to older clients.

The Society of Trust and Estate Practitioners ( STEP)

The Mencap Panel of Solicitors.

If you would like a more detailed explanation please read on. Alternatively just call us on 020 3633 4060

An explanation of the rules as of May 2013.

The Law

Anyone is free to dispose of their property as they wish, whether during their lifetimes or by will. That is a fundamental right. Where the law tries to restrict or cut back on that right or create adverse consequences, then it must do so explicitly.

Background

Reg 25 of the National Assistance (Assessment of Resources) Regulations 1992 permits a local authority to take "notional capital" into account in a financial assessment. It states:

"A resident may be treated as possessing actual capital of which he has deprived himself for the purpose of decreasing the amount that he may be liable to pay for his accommodation".

Par 6.064 of the Charging for Residential Accommodation Guide (CRAG) adds:

"The timing of the disposal should be taken into account when considering the purpose of the disposal. It would be unreasonable to decide that a resident had disposed of an asset in order to reduce his charge for accommodation when the disposal took place at a time when he was fit and healthy and could not have foreseen the need for a move to residential accommodation."

Propositions:

Reg 25 puts the onus on the local authority to satisfy itself that reducing care fees was a "significant operative purpose" of a disposition.

The test of purpose is subjective (see Beeson v Dorset County Council, below). There must be evidence that the donor of the property actually foresaw that he or she would require residential care. The CRAG makes it clear that reg 25 does not cover gifts "in case" and that local authorities should not employ the wisdom of hindsight in making a judgement about intention. The test can be summarised in the following way:

• where the gift leads to a reduction in resources available to pay care fees which are clearly, and in the knowledge of the donor, likely to fall due in the near future, then there is "deprivation";
• where the result of the gift is merely the possibility of reduced resources being available to pay home fees, which may or may not arise at some indeterminate date in the future, then reg 25 should not apply. (see Coldrick D, Protecting the Assets of Older People, Ark Group 2000)
• The local authority must consider all the evidence as to purpose, and must make findings of fact based on that evidence. Rejection of subjective evidence requires a finding as to credibility. Evidence as to whether or not a resident was aware of the notional capital rule will be crucial.

"I do not see how an applicant could be found to have the relevant purpose unless he was aware of the possibility that he might be provided with accommodation and that he might be liable to pay for it." (Richards J in Beeson v Dorset CC).
• Where there is no direct evidence as to purpose, all the primary facts must be weighted one against the other before an inference may properly be drawn. The local authority should obtain the fullest possible information on why the deprivation took place.
• Where the donee of property has provided personal care for the donor, which perhaps enabled the latter to stay at home for longer than might otherwise have been expected, the gift may be seen as recompense for value received, or even as a form of "consideration". Care contracts, preferably express, but possibly implied, should be capable of being relied on. In addition, proprietary estoppel could form the basis of a challenge to a local authority which has purported to assess the value of a property as notional capital. The courts have considered caring relationships in various contexts over the past few years – see, for example, Ellis v Chief Adjudication Officer [1998] 1 FLR 184; Re Kumar (a Bankrupt) [1993] 2 FLR 382; Gillett v Holt [2000] 2 AER 289.
• Decisions must give reasons - according to basic public law principles.

Case Study

Beeson v Dorset County Council (2002) 5CCLR5

Mr B lived in a house in Weymouth for many years. It was his only capital asset. His wife died in 1989, and after that he managed on his own, with some home care from the council, until 1997, when he had a stroke. He was then 90. He was discharged home from hospital in April 1997 with an intensive care package. About a week later he transferred the house to his son. Mr B was able to continue living at home, with a lot of support, until April 1999, when he was admitted to hospital in a state of collapse. Although he returned home again, he was becoming increasingly frail. In August he fell and was admitted to hospital again. In September he was assessed as needing residential care.

In October 1999 the council’s finance officer decided that Mr B had deprived himself of an asset with which he could have funded his placement. The matter was then referred to the council’s Complaints Panel, which supported the finance officer’s decision.

In the Administrative Court, Richards J ruled that there was no evidence that Dorset County council ever considered Mr. Beeson’s subjective purpose, although there was evidence that he never contemplated going into a home and that the main reason why he transferred his property to his son was concern for his financial position after a divorce and to ensure that he had a home.