Summary: Mrs X complains the Council failed to properly consider the law and guidance when deciding Mrs W deliberately deprived herself of capital to avoid care charges. The Council’s decision is not fully in line with the guidance, which means it is flawed and this causes injustice as it is in doubt. The Council needs to reconsider its decision.

The complaint

1. The complainant, whom I shall refer to as Mrs X, complains the Council failed to properly consider the law and guidance when deciding Mrs W deliberately deprived herself of capital to avoid care charges.

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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, sections 30(1B) and 34H(i), as amended)

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How I considered this complaint

4. I have:
• considered the complaint and the documents provided by Mrs X;
• discussed the complaint with Mrs X; and
• shared a draft of this statement with Mrs X and the Council, and invited comments for me to consider before making my final decision.

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What I found

Legal and administrative background

5. The Care and Support (Charging and Assessment of Resources) Regulations 2014, and the Care and Support Statutory Guidance 2014 (“the Guidance”) set out the charging rules. When a council decides to charge for care, it has to follow these rules when deciding how much a person has to pay towards their care.
6. The Guidance says anyone with over the upper capital limit (currently £23,250) can be expected to pay the full cost of their care.
7. Annex E of the Guidance deals with the deprivation of assets. It says:
• 3) “When undertaking or reviewing a financial assessment a local authority may identify circumstances that suggest that a person may have deliberately deprived themselves of assets in order to reduce the level of the contribution towards the cost of their care. In such circumstances, the local authority should have regard to this guidance. Clearly, local authorities should treat this issue with sensitivity and care.”
• 4) “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. Whilst the Care Act 2014 represents an important step forward in redefining the partnership between the state and the individual, it is important that people pay the contribution to their care costs that they are responsible for. This is important to the overall affordability of the care and support system. A local authority should therefore ensure that people are not rewarded for trying to avoid paying their assessed contribution.”
• 5) “But deprivation should not be automatically assumed, there may be valid reasons why someone no longer has an asset and a local authority should ensure it fully explores this first. However, the overall principle should be that when a person has tried to deprive themselves of assets, this should not affect the amount of local authority support they receive.”
• 11) “There may be many reasons for a person depriving themselves of an asset. A local authority should therefore consider the following before deciding whether deprivation for the purpose of avoiding care and support charges has occurred:”
1. “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?”
2. “did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs?”
8. 12) “For example, 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.”
9. 18) “If a local authority decides that a person has deliberately deprived themselves of assets in order to avoid or reduce a charge for care and support, they will first need to decide whether to treat that person as still having the asset for the purposes of the financial assessment and charge them accordingly.”
10. 19) “As a first step, a local authority should seek to charge the person as if the deprivation had not occurred. This means assuming they still own the asset and treating it as notional capital or notional income.”

What happened

11. Mrs W has had a diagnosis of cerebrovascular disease since 1995 and essential hypertension since 2012. She created investment trusts in 1999 and 2000.
12. Mrs W moved into a retirement flat in April 2014, as her bungalow was no longer suitable for her; too large to maintain and with unlevel floors, increasing the risk of falls. Mrs W had no need for care and support services at the time. However, she had a history of falls (two) and had a warden call service in place.
13. In January 2015 Mrs W created a trust under which ownership of the retirement flat transferred to the trustees.
14. Since early 2018 Mrs W has lived in residential care. She now lacks the capacity to manage her own finances.
15. Mrs W’s daughter, Mrs Y, contacted the Council in November 2018 saying her mother’s capital was falling to £23,250.
16. On 7 March 2019 the Council wrote to Mrs Y. It said it had reservations about the purpose of the trust into which her mother had placed her flat. It said Mrs W’s choice of a retirement flat was influenced by it being:
• in a complex with a warden call service;
• closer to family who could provide more support if needed.
17. It noted Mrs W had a history of falls and a warden call service. It said her medical history (i.e. cerebrovascular disease) “suggested it was very likely she would need care in the future and indeed, relatively shortly after moving into (the retirement flat) her condition started to deteriorate significantly”. It accepted Mrs W intended the retirement flat to be her final home.
18. The Council said it had tried to find out what prompted Mrs W to set up the trust, but it appeared no one could say for sure. It said Mrs Y’s statement that another company had set up the trust, rather than Mrs W’s long-term financial advisor, contradicted the claim that the trust was part of long-term estate planning. It said Mrs W had deprived herself of the asset so it would treat her as still having the capital of around £120,000. It offered the trust a deferred payment agreement.
19. Mrs Y complained to the Council about its decision.
20. When the Council replied it referred to the Guidance. It said:
• that Mrs W was 84 in 2015, and had a history of Occupational Therapy involvement and falls, supported “some notion of an expectation of care and support”;
• her medical history included cerebrovascular disease from 1995 and essential hypertension from 2012, the latter closely managed to prevent the risk of stroke, suggested Mrs W was not fit and healthy in 2015;
• that Mrs W moved to accommodation where she could receive support when needed, and the other above reasons, meant she could have foreseen the need for care and support;
• that the trust was for the benefit of family members, Mrs W remained living in the property and the financial assessment form stated the property was “for zero consideration”, all supported the likelihood that care was a significant motivation in creating the trust;
• it had been Mrs W’s responsibility to provide guidance to trustees (which include Mrs Y) on the reason for creating the trust. But Mrs Y’s explanation, that it had been part of Mrs W’s “estate planning over decades”, was not definitive about the motivation to create the trust.
21. The Council said there were many companies which can create a property trust document, specifically with the intention of helping people to deprive themselves of their assets to avoid charges. It said:
• “The council has to be certain through investigations, that those that have created such trusts have not fallen foul of unscrupulous companies that effectively ‘con’ people into signing documents where the motivation to avoid care costs is the drive behind the transfer.”

Is there evidence of fault by the Council which caused injustice?

22. That Mrs W deprived herself of a capital asset (her bungalow) when she set up the Trust in 2015 is not in dispute. The only dispute is over the Council’s decision that she did this deliberately to avoid care costs.
23. It is not for me to say whether Mrs W deprived herself of capital to avoid care costs. My role is to consider whether the Council reached its decision in line with the Guidance.
24. The Guidance says councils should address two questions before deciding whether deprivation to avoid care charges has occurred. The Council has addressed the first question, whether Mrs W could have had a reasonable expectation of needing care and support. However, it has not addressed the second question, whether Mrs W had a reasonable expectation of having to contribute towards the cost of her eligible care needs. That is fault by the Council. It means its decision is flawed which causes injustice to Mrs W as it is in doubt. So the Council needs to reconsider it.

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Agreed action

25. I recommended the Council within four weeks reconsiders its decision on the deprivation of Mrs W’s capital, addressing all the questions in the Care and Support Statutory Guidance. While the council believes it has already followed appropriate procedures for reaching its conclusions about whether the individual had a reasonable expectation of having to contribute towards the costs of Mrs W’s eligible care needs, it has agreed to reconsider its decision.

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Final decision

26. I have completed my investigation as the Council has agreed to take the action I recommended.

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Investigator's decision on behalf of the Ombudsman