Summary: Mrs Y complains the Council decided her mother deliberately deprived herself of assets to avoid paying care fees. It treated the value of her former home as notional capital. Mrs Y says the transfer of her mother’s home was not to avoid paying care fees the Council has provided no evidence that it was. The Ombudsman finds fault in how the Council made its decision.

The complaint

1. The complainant, who I refer to as Mrs Y, complains the Council treated the transfer of her parents’ (“Mr and Mrs Z”) property to her as a deliberate deprivation of assets. Years later, when her mother developed care and support needs, the Council treated her share of the value of the home as notional capital. Mrs Y says neither of her parents had any indication of a need for care and support at the time of disposal and it was not done to avoid paying care fees.

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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. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. 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

5. I considered the information Mrs Y provided and made enquiries of the Council. I sent a copy of my draft decision to the Council and Mrs Y for their comments, before making a final decision.

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What I found

Law and Guidance

6. The Care Act 2014 and associated Care and Support Statutory Guidance (“the Guidance”) set out the rules local authorities must follow when undertaking a financial assessment to decide how much a person must pay towards the costs of their residential care.
7. The law states that people who have over the upper capital limit (currently £23,250) are expected to pay the full cost of their residential care home fees. Once their capital has reduced to less than the upper capital limit, they must only pay an assessed contribution.
8. The Guidance says people should be able to spend the money they have saved as they wish. However, it is important people pay the contribution they are responsible for towards their care costs. It says a local authority should ensure people are not rewarded for trying to avoid paying their assessed contribution.
9. If a local authority decides a person has intentionally deprived themselves of assets to avoid paying care fees, it may treat those assets as notional capital in its financial assessment. Notional capital is where the local authority counts the value of the assets in its financial assessment, as if the person still owned them.
10. A person can deprive themselves of assets in many ways. The Guidance says a common approach may be a lump-sum payment to someone, for example as a gift.
11. Local authorities should not assume someone has intentionally deprived themselves of assets to reduce their contribution to care fees. The Guidance says there may be other valid reasons. It says, when deciding whether the purpose of the deprivation was to avoid care fees, local authorities should consider:
• 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?
• did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs?
12. Past case law says local authorities cannot look into the mind of the person. They can only look at the nature of the proposal within the context of the time and circumstances in which it took place. However, it also says if someone provides evidence a person has not deprived themselves of assets, it must give adequate reasons as to why it rejects that evidence.

Background

13. Mr and Mrs Z jointly owned their home. In 2002 they transferred ownership of their home to Mrs Y. Mr and Mrs Z continued to live in the home. Neither Mr or Mrs Z had any significant health issues at the time of the disposal. Both were in their early 70s.
14. In 2016 Mr Z passed away. He did not receive any care and support before he died.
15. In early 2017 Mrs Z was diagnosed with dementia. In late 2018 Mrs Z had a fall at home and was admitted to hospital. The hospital discharged Mrs Z in early 2019. Mrs Z had another fall in April 2019 and received a care assessment in July 2019, at which point she entered a care home.
16. Mrs Z’s capital was below the threshold, so Mrs Y applied for funding from the Council, who completed a financial assessment. In October 2019 the Council wrote to Mrs Y asking her to provide any reasons for the transfer of the property to her in 2002. Mrs Y said she did not know the reason and her parents did not discuss the transfer with her. She said both her parents were in good health at the time.
17. The Council found the transfer of the property was a deliberate deprivation of assets. It said that Mrs Z was 71 years old and it is a fact of life that as people age there is an increasing likelihood of the need for further care and support. It said there was no apparent need for the transfer when Mr and Mrs Z could have left the property in their will. It said Mrs Y had not provided any reasonable explanation for why Mr and Mrs Z made the transfer. Therefore, the Council considered a significant motivation was to protect the property from any possible future care and support needs.
18. The Council treated the value of Mrs Z’s share of the property as notional capital.
19. Mrs Y appealed the Council’s decision. Her solicitor said that in 2001 Mr and Mrs Z sought advice about inheritance and succession. Following this advise they decided to gift their only asset, the property, to their only child, Mrs Y. The solicitor said the Council could not read anything adverse from this as it was normal for older people to consider these things and it is enshrined in law that people can achieve inheritance concessions by taking actions within their lifetime. The solicitor outlined again that it was fifteen years between the transfer and Mrs Y being diagnosed with dementia. She said the need for care and support was not foreseeable at the time of the transfer.
20. The Council heard the appeal in June 2020. The appeal panel noted the value of the property at the time of the disposal was significantly below the level for inheritance tax. It found there was no apparent need for or legal reason to transfer the property and no potential inheritance tax gain. The Council did not uphold the appeal and said it considers it is a reasonable conclusion that Mr and Mrs Z sought advice to provide protection of the property from inclusion in the event of need for care and support.

Findings

21. I find fault in how the Council reached its decision.
22. The Guidance is clear that councils should not assume deprivation as there may be other valid reasons. The Council’s policy says the same. In deciding whether avoiding care and support fees was a significant motivation, the Council should consider whether the person had a reasonable expectation for care and support.
23. In this case, the only reason the Council relied on in deciding Mrs Z had a reasonable expectation of care and support, was her age at the time of the transfer. The Council is essentially applying a blanket policy whereby if anyone gives away their assets, after a certain age, it will assume the purpose was to avoid care fees, unless the person can provide indisputable evidence otherwise. This is not consistent with the law or the Guidance. The Council should be able to demonstrate some reason, other than purely age, to believe the person had a reasonable expectation of the need for care, and that their intention was to avoid paying for that care.
24. Not everyone accesses care or support during their lifetime. Mr Z is an example.
25. I understand the Council’s comments about the property value being significantly lower than the inheritance tax threshold. However, there are many reasons Mr and Mrs Z might have decided to go ahead with the transfer regardless of this, for example to protect against any future increase in value. The Council is placing the onus on Mrs Y to provide a watertight explanation for what her parents intention was at the time of the disposal, when it has not satisfied the basic test of demonstrating some evidence of deliberate deprivation in the first instance.

Consideration of remedy

26. I have found fault in the way the Council applied the law and guidance. I recommend the Council revises its financial assessment, so that it does not include the value of the property as notional capital.

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Agreed action

27. The Council has agreed to, within a month of its decision:
• Apologise to Mrs Y for the fault in the way it decided whether the transfer was a deliberate deprivation of assets
• Revise its financial assessment so it does not include the value of the property as notional capital

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Investigator's decision on behalf of the Ombudsman