Summary: We have found fault with the way the Council carried out a financial assessment. The Council did not properly consider Mrs C’s individual circumstances in deciding whether she was eligible for funding by the Council. Mrs C has suffered an injustice as there is uncertainty whether the Council considered all the relevant factors when it made its decision. The Council has agreed to review the financial assessment.

The complaint

1. Mr B complains on behalf of his mother, Mrs C. He says the Council did not properly assess Mrs C’s finances and, as a result, had decided that Mrs C is not eligible for Council funding.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

4. I have discussed the complaint with Mr B and his representative. I have considered the documents he and the Council have sent, the relevant law, guidance and policies and both sides’ comments on the draft decision.

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What I found

Assessment of needs and care plan

5. The Care Act 2014 and the Care and Support Statutory Guidance 2014 (updated 2017) and the Care and Support (Charging and Assessment of Resources) Regulations 2014 set out the Council’s powers to charge for care and support. The Council also has its own charging policies.

Financial assessment

6. If a council is planning to charge a person for the care and support it is providing, it must carry out a financial assessment of the person’s capital and income to decide how much the person should contribute to the cost of the care.

Capital threshold

7. The funding rules are complex and the rules I have set out in this decision relate to residential care only. For the purpose of this complaint, it is sufficient to say that the upper capital limit for Council funding for residential care is £23,250. People who have capital over the upper capital limit are expected to pay the full cost of their residential care home fees. However, once their capital has reduced to less than the upper capital limit, they only have to pay an assessed contribution towards their fees.
8. There are lot of different regulations to decide what capital is eligible and what capital is disregarded. I have summarised the relevant sections.

12-week disregard

9. A person’s home will normally be included in the calculation of the capital but a local authority must disregard the value of the home for the first 12 weeks when the person first enters the care home as a permanent resident. This is known as the 12-week property disregard.

Notional capital

10. In some circumstances a person may be treated as possessing a capital asset even where they do not actually possess it. This is called notional capital.
11. Notional capital includes capital:
• the person has deprived themselves of in order to reduce the amount of charge they have to pay for their care.

Deprivation of assets

12. The Guidance says deprivation of assets:
• ‘means where a person has intentionally deprived or decreased their overall assets to reduce the amount they are charged for their care. This means that they must have known that they needed care and support and have reduced their assets to reduce the contribution they are asked to make towards the cost of that care and support.’
13. ‘Where this has been done to remove a debt that would otherwise remain, even it that is not immediately due, this must not be considered as deprivation’ (CASS guidance Annex E, paragraph 7).
14. The Guidance says people should be treated with dignity and respect and be able to spend the money they have saved as they wish – it is their money after all. But it is important that people pay the contribution to their care costs that they are responsible for. A local authority should therefore ensure that people are not rewarded for trying to avoid paying their assessed contribution.
15. The Guidance says there may be many reasons for a person depriving themselves of an asset. A local authority should consider the following before deciding whether a deprivation of assets has occurred:
• (a) Whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; at the point the capital was disposed of could the person have a reasonable expectation of the need for care and support?
• (b) Did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs?
16. The Guidance also says it would be unreasonable to decide that a person had disposed of an asset in order to reduce the level of charges for their care and support needs if at the time the disposal took place they were fit and healthy and could not have foreseen the need for care and support.

What happened

17. Mrs C was an 89 year old widow who lived independently in a retirement flat.
18. Mrs C bought the retirement flat in June 2017 after selling a bungalow which she and her husband had owned since 1998. As the bungalow was worth more than the flat, Mrs C had a surplus of cash. Mrs C used that cash to renovate the flat. Mrs C said she spent £8-9,000 on the flat as she put in a more modern bathroom and recarpeted and redecorated the flat throughout. Mrs C said it was her plan to live in the flat until she died.
19. After the renovations were completed, in September 2017, Mrs C had £130,000 cash left and she transferred £100,000 to Mr B. She said she kept £30,000 for her own future use.
20. Mr B later explained the reason for the transfer of £100,000 in correspondence to the Council.
21. Mr B said he and his ex-wife bought a farm in 1996 which his parents lived in. When Mr B and his ex-wife separated, they sold the farm and Mr B said he gave £60,000/£65,000 to his parents to allow them to buy a bungalow. This was done on the understanding that, if they lived there until they died, he would inherit the bungalow as he was their only child. But, if they ever sold the bungalow, they would pay him any equity that was left over after they had purchased an alternative property. He said there was never a formal document, but there was an understanding/agreement within the family.
22. When Mrs C made the transfer in June 2017, she lived independently. She did not have care needs and did not receive a care package. She had no dealings with the Council in terms of any care needs.
23. In March 2018, Mrs C had a fall linked to a UTI. She suffered a broken wrist and went to hospital. She then had further falls later in 2018 and her condition deteriorated. The Council assessed Mrs C’s needs in late 2018 and said she needed residential care. Mrs C moved to a care home in November 2018.
24. The Council assessed Mrs C’s finances and noted the transfer of £100,000. The finance officer referred the matter to the Council’s funding panel to decide whether there had been a deprivation of assets.
25. The Panel considered Mrs C’s financial assessment and said that there had been a deprivation of assets. The reason was:
• ‘Deprivation due to timing at a point when the need to pay future care charges was foreseeable.’
26. The Council wrote to Mr B in January 2019 and said:
• ’Gifts that are made close to or at a time when the need for care was foreseeable, or following the start of care services, which have the effect of avoiding or reducing the care charges’ are treated as a deprivation of asset.
• The Council said it had treated the transfer of £100,000 as a deprivation of assets and it would include the £100,000 in Mrs C’s capital.
• As a result, Mrs C was not eligible for the 12-week disregard.
27. Mr B sought legal advice and appealed the decision. In May 2019 he wrote to the Council and said:
• When Mrs C made the transfer, she ‘was in good health at the time… and was talking of her plans to go on cruise… she regularly walked into town - journey of over a mile. She would meet up with me and other family members and enjoy meals out and family occasions. She also went to the theatre in London by train with family and clearly led a full, active life.’
• Mrs C had no expectation of requiring care and support services at any time in the future when she made the transfer.
• The Council had not shown that it had taken into account the fact that Mrs C was fit and well at the time of the transfer.
• It ‘came completely out of the blue’ when Mrs C had the urinary infection which led to her hospitalisation in March 2018.
28. In his letter, Mr B referred to his solicitor’s advice and the CASS guidance. He said:
• Mrs C had no care and support needs when she made the transfer and/or avoiding future care charges was not a significant motivation in her decision.
• ‘It is illogical to expect [Mrs C] to foresee the need to contribute to the costs when she did not foresee the care needs that the costs relate to’.
• The solicitor referred to Paragraph 7 of Annex E of the CASS Guidance which said that repayment of a loan would not be considered as deprivation of asset.
29. The matter returned to the Panel in June 2019 but the decision remained the same.
30. The Council wrote to Mr B in June 2019 and explained the decision:
• ‘because of the timing of the transaction, at a point when the need to pay future care charges was foreseeable, and because you have not provided any evidence in support of assertion this was in repayment of the loan.’
31. Mr B’s solicitor wrote to the Council in July 2019 and said it was unreasonable for the Council to decide that Mrs C’s motivation for the transfer was to avoid paying care charges, when, at the time, she was fit and healthy and could not have foreseen the need for care and support. He said this was age discrimination.
32. The Council’s panel considered the matter further on 17 July 2019 but said:
• ‘Panel agreed this was still deprivation, as evidence of the loan was still not provided by the solicitors.’
33. The Council wrote to Mr B’s solicitor on 21 August 2019 and said:
• There should be some documentary evidence of the loan Mr B made. The solicitor acting for Mr B would have insisted on a declaration of trust of a loan agreement. There should be some documents relating to the transactions, either kept by the solicitor or Mr B or Mrs C.
• ‘If matters did indeed proceed as now suggested, your client must have been given a completion statement at the time of the sale of the farm and the acquisition of the bungalow – yet you have not produced any paperwork for any of the transactions in question.’
• It had considered the circumstances of the transfer. Mrs C’s estate did not attract inheritance tax so there was ‘little other justification for the gratuitous payment other than to avoid the future cost of care. Whilst you client may take a different view; our view is not unsustainable or otherwise unreasonable.’
• ‘Your client asserts that his mother was in good health and that, as far as timing is concerned, there was no expectation that she would need to meet the cost of care.  That is an argument that the panel rejects.  Your client’s mother was 89 at the time of the gift. At that age there must be a reasonable expectation that there will be future care needs that may be just around the corner.  That is not an unreasonable supposition which was, in the event, borne out by subsequent events.  We reject the argument that this is prohibited conduct and amounts to unlawful age discrimination.’

Analysis

34. It is not the role of the Ombudsman to carry out a financial assessment or to say whether there has been a deprivation of assets or not. I have considered whether there was any fault in the way the Council carried out the financial assessment and whether the assessment was done in line with the law, guidance and Council’s policies, from the evidence the Council has provided.
35. The Council’s role is to assess a person’s finances to decide whether they are eligible for Council funding.
36. The consideration of deprivation of assets is a difficult one, as the test is a subjective test. In deciding whether a deprivation of assets took place, the Council has to assess whether avoiding a contribution to the care costs was a significant motivation for the disposal of the asset. It requires the finance officer to assess what the intention was of the donor of the asset, at the time the transfer was made.
37. I have described the factors the Council should consider when deciding whether a deprivation of assets has occurred, in paragraph 15.
38. There was fault in the way the Council assessed Mrs C’s finances. The Council has not shown that it properly considered Mrs C’s individual circumstances when it made its decision.
39. The Council accepted that Mrs C had no needs for care and support when she made the transfer to Mr B. The Council did not have any evidence, as far as I am aware, that Mrs C knew or anticipated that she would need care and support in the future. Mrs C had not had any involvement with the Council’s adult social care team and there was no evidence that Mrs C was aware of the funding rules or the funding threshold of £23,250.
40. There was evidence that Mrs C was reasonably fit and healthy when she made the transfer.
41. There was evidence that she was not anticipating that she would have care needs in the future. On the contrary, she bought a new flat and carried out the renovation works which showed that it was her plan to live there long term.
42. The Council has not explained how it considered these factors in its assessment of Mrs C’s finances. Instead the Council relied on her age as the evidence of the reasonable expectation of the need for care and support.
43. By doing so, the Council failed to show it properly applied the test set out in the CASS Guidance and case law as it should have taken all of Mrs C’s individual circumstances and evidence into consideration, not just her age. The Council was saying, by implication, that there were restrictions on 89 years old residents giving away assets, however fit and healthy they may be.
44. I checked the legislation, the regulations and the CASS guidance, but none of those documents set any age limit for the disposal of assets.
45. In Mrs C’s case, Mr B explained the motivation behind the transfer further. He said the payment was to honour a previous informal understanding between him and his parents.
46. There was no need, of course, for the transfer to be a repayment of a loan to be allowed. I note Mr B quoted CASS Guidance Annex E paragraph 7 as part of his solicitor’s advice, but it is my understanding that Mr B’s solicitor was not relying on paragraph 7.
47. It is my understanding that Mr B explained the reason behind the transfer to further explain Mrs C’s motivation for the transfer and the Council had to consider the information in that context.
48. However, the Council’s position from the outset was that it would not accept the possibility of an informal agreement. It would only accept a formal loan which was declared to the solicitor and only if Mr B provided documentary evidence of a loan.
49. The Council went so far as to say that, even if Mr B could provide evidence through the property transactions that he gave money to his parents, it would still not accept this unless Mr B could provide evidence of a loan.
50. In my view there was some fault in the way the Council considered the issue of the loan/agreement. Mr B explained from the outset that there was no formal loan agreement or any document. He said from the outset that, if his parents had continued to live in the bungalow until they died, he would not have expected the money to be repaid while they were alive. The Council refused to consider the possibility of an informal agreement and then insisted on documentary evidence which it knew Mr B could not provide.
51. Further considering motivation, the Council said that the only reason a person would give away assets was to avoid inheritance tax or care charges and, as Mrs C’s estate was under the inheritance tax threshold, this proved that Mrs C’s motivation was the avoidance of care charges.
52. That argument was flawed as most people could think of many reasons why people give away assets which are not related to avoiding taxes or charges. Parents often give money to their children while the parents are still alive so that the children can enjoy the money while they are still younger and do not have to wait until their parents die.
53. Mr B and Mrs C have suffered an injustice through the Council’s actions as it is not certain that the Council has properly assessed Mrs C’s finances.
54. I therefore recommend the Council re-assesses Mrs C’s finances. In doing so, the Council should explain how it has properly considered the facts and evidence in Mrs C’s case to make a decision about the deprivation of assets.

Agreed action

55. The Council has agreed to carry out a further assessment of Mrs C’s finances within two months of the final decision and to take the matter back to its panel.

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Final decision

56. I have completed my investigation and found fault by the Council. The Council has agreed the remedy to address the injustice.

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Investigator's decision on behalf of the Ombudsman