Summary: Mr X complains about the Council’s decision to treat his wife as having deprived herself of capital in order avoid care charges when they gave their home to a daughter. The Council was at fault over the way it made its decision. It therefore needs to reconsider its decision to make sure there is no fault.

The complaint

1. The complainant, whom I shall refer to as Mr X, complains about the Council’s decision to treat his wife as having deprived herself of capital in order to avoid care charges when they gave their home to a daughter.

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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 Mr X;
• discussed the complaint with Mr X;
• considered the comments and documents the Council has provided in response to my enquiries;
• considered the Ombudsman’s guidance on remedies; and
• invited comments on a draft of this statement from Mr X and the Council, for me to consider before making my final decision.

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What I found

Legal and administrative background

5. The charging rules for residential care are set out in the Care and Support (Charging and Assessment of Resources) Regulations 2014 (the Regulations), and the Care and Support Statutory Guidance 2014 (the Guidance). When the Council arranges a care home placement, it has to follow these rules when undertaking a financial assessment to decide how much a person has to pay towards the cost of their residential care.
6. The rules state that people who have over the upper capital limit (£23,250) have to pay for 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.
7. The council must assess the means of people who have less than the upper capital limit, to decide how much they can contribute towards the cost of their care.
8. The Guidance says:
1. “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.” (Annex E, paragraph 3)
2. “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.” (Annex E, paragraph 4)
3. “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.” (Annex E, paragraph 5)
4. “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?” (Annex E, paragraph 11)
5. “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.” (Annex E, paragraph 12)
6. “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.” (Annex E, paragraph 18)
7. “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.” (Annex E, paragraph 19)
8. “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 E, paragraph 43)
9. “any additional amounts the person may need so they can maintain their home during their temporary stay so that it is in a fit condition for them to return to must be disregarded. Such expenses may include, but are not limited to, ground rent, service charges, water rates or insurance premiums”. (Annex F, paragraph 12)

What happened

9. Mrs X lived at home with her husband who was her carer. Between 2016 and 2019 the Council arranged short periods of residential respite care. They provided breaks to Mr X from his caring role. One enabled him to go into hospital. Another enabled a ground floor shower to be fitted in their home. The final period was when they moved to a sheltered housing flat which needed repairs to make it habitable. The Council charged Mrs X for respite breaks.
10. In 2019 Mr & Mrs X decided to move to sheltered housing. Mrs X was finding it difficult getting to the ground floor bathroom with her wheeled walking frame. The house was also becoming too difficult for Mr X to maintain.
11. They found a sheltered housing flat. The terms of the lease required them to sell their home. They also had six months to purchase the lease on the sheltered housing flat. They planned to spend the rest of their days together in the flat.
12. Mr X says they decided to gift their home to a daughter to comply with the terms of the lease. They completed the transfer on the same day they purchased the lease for the sheltered housing flat. He says selling the home would have left them homeless while urgent work was carried out to the sheltered housing flat.
13. Mr and Mrs X caught COVID-19 in November 2020. They both spent time in hospital.
14. When Mrs X left hospital in early 2021, she stayed in residential respite care, only returning home in June 2021. Mr X was having problems with long-COVID. So, Mrs X went to a care home for respite care in July. The plan had been for her to stay there a week. However, after receiving a diagnosis of vascular dementia, everyone agreed she should live permanently in the care home.
15. When the Council completed a financial assessment in December, it decided Mrs X could afford to pay for her own care from 2 November. This was on the basis that her decision to gift her share of their home to their daughter was a deliberate deprivation of capital to avoid care charges.
16. Mr X complained to the Council in January 2022 about its decision. He disputed its claim that they had deliberately tried to avoid paying Mrs X’s care fees by transferring their previous home to a daughter. He explained about the circumstances which resulted in Mrs X needing residential care. He said:
• they planned to remain living independently after buying the flat;
• they had to sell or transfer ownership of the house in order to buy the lease on the flat and had six months to do this;
• they transferred the flat to a daughter so family (who live abroad and elsewhere in the UK) would have somewhere affordable to stay and could therefore visit regularly;
• this also ensured they had somewhere to return to if the flat was not suitable for them; and
• transferring the flat ensured the proceeds could be distributed to family after their deaths.
17. When the Council replied in February, it referred to the Regulations but quoted from Annex E, Section 11 of the Guidance (see paragraph 8.d) above). It referred to seven periods of respite care between 2016 and 2019, for which it had charged. It said based on this there was a reasonable expectation of the need for care and support when the property was transferred in June 2019. It said it would charge Mrs X as if she still had the capital (i.e. her share of the property given to their daughter). It said it could seek to recover any remaining fees “from the people that have benefitted from the gift”, if she could not afford to pay the charge.
18. Mr X’s daughter wrote to the Council in February as they were not happy with its response. She said:
• the motive for transferring ownership of the property was primarily to ensure they could meet the requirements for buying the lease on the sheltered housing flat;
• the transfer was also made to ensure there was somewhere for family to stay when they visited from abroad for longer periods to offer support and to ensure the proceeds would be distributed to family members after her parents' deaths;
• there was no reasonable expectation that Mrs X would need long-term residential care and support in 2019;
• they moved to the sheltered housing flat to avoid the need for permanent residential care;
• Mr & Mrs X had not known their previous home would be taken into account when charging for residential care until the Council wrote to them in December 2021;
• the Council had not offered to visit Mr X to explain its decision or get his version of events.
19. When the Council responded to Mr X’s appeal in April 2022, having first visited him to discuss his concerns, it said due to the timing of the disposal of their home and the fact Mrs X was already in receipt of care and support at that time, it was entitled to include her share of its value as notional capital and charge her as if she retained her share of the asset. It went on to repeat much of what it said in its previous letter, including referring to the Regulations but quoting from Annex E, Section 11 of the Guidance.

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

20. It is not for me to say whether Mrs X deliberately deprived herself of capital to avoid care charges. My role is to consider whether there has been fault by the Council in the way it made its decisions. If there has, the decision is flawed and the Council needs to reconsider it.
21. There is no dispute over the fact Mrs X deprived herself of capital when she transferred her share of the house she had owned with her husband to one of their daughters. The dispute is over whether she did this with the intention of avoiding care charges.
22. In line with the Guidance, the Council has taken account of the fact Mrs X had care and support needs in 2019 when they transferred ownership of their home to their daughter. The Council has not specifically addressed the question of whether she had “a reasonable expectation of needing to contribute to the cost of their eligible care needs”. While that was fault by the Council, it is clear Mrs X knew there were charges for care as she had to contribute towards the cost of her respite care. It has been established by the courts that the knowledge about charges may be general and does not have to be detailed or specific.
23. However, it does not necessarily follow that because someone has care and support needs and knows about care charges, that deliberate deprivation of capital to avoid those changes has occurred. Councils need to explore the reasons for any deprivation of capital and consider the motivation for it. There is no evidence the Council did this before making its initial decision. That was fault by the Council.
24. When complaining about and appealing the Council’s decision Mr X and his daughter explained at some length why they believed the Council’s decision was wrong and what had motivated Mrs X to transfer her share to the daughter. When responding, the Council made no reference to what they had said. That was also faut by the Council.
25. These faults mean the Council’s decision was flawed. To remedy the injustice arising from this, it needs to reconsider its decision without fault.

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Agreed action

26. I recommended the Council:
• within four weeks reconsiders its decision, including the comments and evidence Mr X and his daughter provided, and addresses the motivation behind the transfer of the property; and
• within eight weeks provides evidence it has taken 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

27. I have completed my investigation on the basis there has been fault. This is because the Council’s decision is flawed and it needs to reconsider it.

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Investigator's decision on behalf of the Ombudsman