Cornwall Council (19 020 372)

Category : Adult care services > Charging

Decision : Upheld

Decision date : 26 Jan 2021

The Ombudsman's final decision:

Summary: Mr X complains about the Council’s decision to treat his late mother as having deliberately deprived herself of capital to avoid care charges, resulting in the family having to pay for her care. The Council was at fault for: failing to apply the proper tests for deprivation of capital; for seeking to restrict Mrs Y’s personal spending to £30.65 a week when she was funding her own care; and for failing to take proper account of the Office of the Public Guardian’s guidance on the scope for gifting. The Council needs to reconsider its decision on the extent to which Mrs Y deprived herself of capital.

The complaint

  1. The complainant, whom I shall refer to as Mr X, complains about the Council’s decision to treat his late mother as having deliberately deprived herself of capital to avoid care charges, resulting in the family having to pay for her care.

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The Ombudsman’s role and powers

  1. 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)
  2. 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

  1. I have:
    • considered the complaint and the documents provided by Mr X;
    • discussed the complaint with Mr X;
    • considered the comments and documents the Council has provided in response to my enquiries; and
    • shared a draft of this statement with Mr 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

  1. Section 4 of the Care Act 2014 requires councils to provide information and advice relating to care and support for adults and support for carers. Section 4(3) says:
    • In providing information and advice under this section, a local authority must in particular:
          1. have regard to the importance of identifying adults in the authority’s area who would be likely to benefit from financial advice on matters relevant to the meeting of needs for care and support, and
          2. seek to ensure that what it provides is sufficient to enable adults-
            1. to identify matters that are or might be relevant to their personal financial position that could be affected by the system provided for by this Part,
            2. to make plans for meeting needs for care and support that might arise, and
            3. to understand the different ways in which they may access independent financial advice on matters relevant to the meeting of needs for care and support.
  2. 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.
  3. The Guidance says anyone with over the upper capital limit (currently £23,250) can pay the full cost of their care.
  4. Paragraph 3.41 of the Guidance says:
    • “The local authority service should include the following aspects of financial information and advice:
      1. Understanding care charges
      2. ways to pay
      3. money management
      4. making informed financial decisions
      5. facilitating access to independent financial information and advice”
  5. 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?”
  6. 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.”
  7. 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.”
  8. 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.”
  9. The Guidance also says:
    • “The local authority must leave the person with a minimum amount of income. This is known as the Personal Expenses Allowance (PEA) and the amount is set out in regulations and updates sent via a local authority circular. Anything above this may be taken into account in determining charges.” (Annex C, paragraph 43)
  10. Section 12(2) of the Mental Capacity Act 2005 says people with Power of Attorney can make gifts:
    • “on customary occasions to persons (including himself) who are related to or connected with the donor, or”
    • “to any charity to whom the donor made or might have been expected to make gifts,”
    • “if the value of each such gift is not unreasonable having regard to the circumstances and, in particular, the size of the donor’s estate.”
  11. The Office of the Public Guardian’s (OPG) practice note (PN7) on Giving gifts: a guide to the legal background for deputies and attorneys says:
    • “The general rule for deputies and attorneys about giving gifts is simple: apart from some exceptions, the law says you must not make gifts from the person’s estate. For attorneys acting under a registered property and financial affairs LPA, these exceptions are set out in section 12(2) of the act. To count as an exception, the gift must satisfy all three points below. It must be:”
        1. “given on a customary occasion for making gifts within families or among friends and associates (for example, births, birthdays, weddings or civil partnerships, Christmas, Eid, Diwali, Hanukkah and Chinese new year)”
        2. “to someone related or connected to the person or (if not a person) to a charity the person supported or might have supported”
        3. “of reasonable value, taking into account the circumstances in each case and, in particular, the size of the person’s estate.”

“If an attorney wishes to make a gift which falls outside these restrictions they must apply to the Court of Protection for approval.”

  1. The OPG’s guidance (OPG2) on Giving gifts for someone else, explains how to decide whether a gift is of reasonable value:
    • “did the person used to give gifts of this value when they had mental capacity?”
    • “would the gift affect the person’s ability to meet their living expenses, now and in the future?”
    • “what is the person’s life expectancy – and will they have enough funds for the remainder of their life?”
    • “does the gift reflect what the person has said they want to leave people in their will?”
    • “Gifts must always be well within what the person can comfortably afford. ‘Affordable’ varies a lot from person to person. A £200 gift has a bigger impact on someone with £9,000 than someone with £90,000.”

What happened

  1. Mr X’s mother, Mrs Y, had dementia and lived in a care home from January 2014 where she funded her own care. This was because she had capital over £23,250 (see paragraph 7 above). She had also paid for her own care while living at home since 2012, when her family first told the Council she had capital over £23,250.
  2. Mrs Y’s family contacted the Council in April 2017 saying her capital had fallen below £23,250, so she should be eligible for its funding. Mr X said his mother had cashed in various policies. He said she had bought a car in 2016 to take her on home visits and to hospital appointments. The Council said it was unlikely to consider this a necessary expense. Mr X also told the Council his mother had given money to the family. According to the Council’s records, it estimated Mrs Y would have had around £105,900 when she moved into the care home and should have had around £36,786 in January 2017.
  3. The Council wrote to Mrs Y’s family in May 2017. It said her capital should have been £41,474.40 in January 2017 (£18,224.40 above the upper capital limit of £23,250). It said there was a weekly shortfall of £490.94 between her income of £270.71 less her disregarded income of £30.65 – personal expenses allowance (PEA) of £24.90 plus the savings disregard of £5.75 – and the care home fees. It said her capital of £18,224.40 should last 38 weeks, until around 9 October 2017. However, it asked her family to provide all her financial records since January 2014.
  4. Mr X wrote to the Council in June. He said the car had been essential for taking his mother out and for hospital appointments, as other forms of transport (care home, taxi and ambulance) had proved unreliable, resulting in missed appointments. He said telling his mother she had to live on £30.65 a week while she was self-funding was wrong and it had never previously told them this. He said his mother had gifted family throughout her life and the amounts were not excessive. He said she had £30,000 in premium bonds, which they had not previously declared.
  5. Mr X wrote again in September saying they were still waiting for some statements (premium bonds and an insurance policy).
  6. On 15 May 2018 the Council completed a self-funding calculation based on the capital Mrs Y had on 7 March 2014. It says she had £139,915.11 which included the money in a current account, an ISA, another bank account, an insurance policy and premium bonds. But the individual figures are not identified. The Council took off the cost of a reclining chair. This meant she had £116,665.11 over the upper capital limit. Based on a shortfall of £422.65 a week between her care home fees (£730) and her income (£307.35), the calculation says Mrs Y’s capital should last 276 weeks (i.e. until 21 June 2019). The Council sent the self-funding calculation to Mr X with a letter explaining its decision. It said the use of Mrs Y capital “above a reasonable level and other than towards the cost of [her] care fees, might be deemed as deprivation and the monies might still be treated as if [she] still owned them”.
  7. Mr X wrote to the Council after receiving its letter and asked for another officer to review his mother’s case. He said they disagreed with its decision as his mother’s care needs had often exceeded the £30 a week it had allowed. He said the car was essential as in February they had taken his mother to a medical appointment when the care home could not provide transport. He said they had recently bought a TV and radio for her new room, and taken up another recliner chair.
  8. Another officer reviewed the self-funding calculation. This says on 23 January 2017 Mrs Y’s capital included:
    • £11,562.97 in one bank account
    • £1,137.60 in another bank account
    • £11,203.00 in notional capital (car £8,118 plus funeral plan £3,085)
    • £33,585.58 in notional capital (cash withdrawals, less allowances of £30.65 a week)
    • £29,999 in premium bonds
  9. This came to £87,488.15 which was £64,238.15 above the upper capital limit. Based on a weekly shortfall of £408.54 between Mrs Y’s income and the care home fees, the Council estimated her capital would fall below the upper capital limit on 27 January 2020.
  10. The Council wrote to Mr X in June to let him know what it had decided. It said it did not accept buying a vehicle was a reasonable expense for someone living in care and had also included the cost of a funeral plan (as notional capital). It said it had added up the cash withdrawals since January 2014, when Mrs Y went into permanent residential care, until 23 January 2017. It said it had taken off any cash paid into one of Mrs Y’s bank accounts, her PEA of £24.90 a week and the savings disregard of £5.75 a week.
  11. In July Mr X said they disagreed with the Council’s decision. He said they asked for help as Mrs Y’s funds had fallen below the upper capital limit some time ago and there was now a large shortfall (around £18,000).
  12. When the Council replied it said it would consider any significant use of capital above a reasonable level as “gifted monies” and had included them as notional capital. This included the car and the funeral plan, which it did not consider a “necessary expense at this point in time”. It noted Mrs Y had regularly withdrawn her pension and Attendance Allowance in cash and there were no receipts to explain what she had spent the money on. Discounting her allowances (£30.65 a week), this amounted to £33,585.58. Although it would expect some small gifts for Christmas, birthdays etc, the amount withdrawn was far in excess of this. However, it said it would consider any receipts for items bought for Mrs Y’s care.
  13. The Council wrote to Mr X on 28 January 2019. It said:
    • a funeral plan was not a reasonable expense as it would disregard £14,250 of Mrs Y’s capital which should cover the cost of a funeral;
    • it needed more information about the car Mrs Y had bought;
    • it also needed more information about the almost £35,000 Mrs Y had spent in cash and on gifts over three years.
  14. When Mr X wrote to the Council in March, he said:
    • Mrs Y’s funeral plan had been delayed and then cancelled so she had to reapply;
    • Mrs Y insisted on paying for a replacement wheelchair accessible car in February 2016.
  15. The Council updated its self-funding calculation based on Mrs Y’s capital on 23 January 2017. It removed the notional capital for the funeral plan (£3,085) but made no other changes. This left £61,153.15 above the upper capital limit. The Council disregarded £30.65 a week of Mrs Y’s income (PEA of £24.90 plus the savings disregard of £5.75). This left income of £322.46 to pay her care home fees, leaving £408.54 to come from her capital over £23,250. It estimated this would last 149.68 weeks (i.e. until 2 December 2019).
  16. The Council wrote to Mr X on 14 June. It said it had reviewed its calculation to allow for buying a funeral plan. However, it did not allow for the cost of an adapted car for £8,188. It said it would not normally expect someone in a care home to buy a car. Nor did the frequency of her hospital appointments suggest this was a cost-effective form of transport. With regard to gifts, it referred Mr X to OPG guidance (see paragraph 15 above) and the need to consider “the possibility that the person will have to pay for care costs or care home fees in future”. With regard to food, the Council said Mrs Y’s care home confirmed her family brought food in for her, but she would eat the food the home provided, unless she had already eaten. With regard to replacing clothes, the care home could not confirm that Mrs Y’s clothes needed replacing more often than it would expect. The Council said Mrs Y’s capital should last until around 2 December 2019.
  17. In August the Council accepted £203.47 paid for a television was a reasonable expense for Mrs Y. However, it said:
    • “With regard to the remaining amounts spent on gifts, cash withdrawals and expenses, our view remains the same in that these are not reasonable expenses made in the best interests of [Mrs Y] and, in the absence of any authority or approval from the Court of Protection, will not be taken into account in your mother’s financial assessment.”
  18. The Council referred Mr X to OPG guidance on making gifts under the Mental Capacity Act (see paragraph 16 above).
  19. Mrs Y died on 7 November, less than a month before the Council expected to start funding her care. Before that, her family paid money into her bank account so she could continue to pay her care home fees as she had no capital left.

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

  1. The Council has never formally addressed the test for deprivation of capital [see 11) a and b in paragraph 9 above]. The Council accepts that is fault.
  2. In producing a self-funding calculation, the Council sought to limit Mrs Y’s personal expenditure to the PEA (plus the savings disregard). That was fault by the Council. The PEA only applies to people who are being charged by a council for their care. That never happened. While Mrs Y was paying for her own care she could do what she wanted with her money (see paragraph 9 above), provided there was no deliberate deprivation of income or capital to avoid care charges.
  3. The Council was right to refer Mr X to the guidance produced by the OPG. However, it has failed to heed that guidance itself. The guidance does not rule out gifting in the way the Council has done. The Council decided Mrs Y should have had £84,400 in January 2017, not far off the £90,000 referred to in the OPG guidance (see paragraph 16 above). It appears she had around £140,000 when she moved permanently to residential care in January 2014 (see paragraph 22 above). The OPG guidance means that at that stage there would have been scope for more significant gifting than when her capital had fallen to a much lower level. The Council has, in effect, ruled out any gifting over that which could be afforded within her “disregarded” income (£30.65 a week). That is fault by the Council.
  4. The Council’s failings have caused injustice as they mean its decision on the extent to which Mrs Y deprived herself of capital is flawed. The Council needs to reconsider that decision taking account of:
    • the test for deprivation of capital in the Statutory Guidance;
    • the fact that Mrs Y was not required to restrict her personal expenditure to £30.65 a week while she was funding her own care;
    • the OPG guidance which allows for gifting beyond that which the Council has accepted.

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Agreed action

  1. I recommended the Council:
    • within six weeks:
      1. reconsiders its decision on the extent to which Mrs Y deprived herself of capital, taking account of the fact she was not required to restrict her personal expenditure to £30.65 a week while she was funding her own care and the OPG guidance which allows for gifting;
      2. considers whether it should have been funding Mrs Y’s care before she died and, if so, refund money to her estate;
      3. pays Mr X £250 for the time and trouble he has been put to in pursuing the complaint.
    • within eight weeks:
      1. takes action to ensure officers deal with decisions on deprivation of capital properly in future.

The Council has agreed to do this.

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Final decision

  1. I have completed my investigation as the Council has agreed to take action which will remedy the injustice it has caused.

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Investigator's decision on behalf of the Ombudsman

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