Deprivation of Assets: When will the local authority challenge gifts to avoid care home fees?

Many families worry about the cost of care eroding their inheritance, and it’s tempting to think that giving away your home or savings will protect them. However, the rules on deprivation of assets are strict, and local authorities are alert to attempts to sidestep care home fees. Understanding when a gift is likely to be challenged can help you avoid costly mistakes and family disputes.

What is Deprivation of Assets?

Deprivation of assets means deliberately reducing your wealth—by giving away money, property, or other valuables—so you’ll pay less for care. Under the Care Act 2014, if a local authority believes you have done this to avoid care charges, they can still treat you as owning the asset when assessing your ability to pay. This is sometimes called “notional capital.”

It’s important to know that there’s no set time limit after which a gift is automatically “safe.” The local authority will look at the facts and timing in each case.

When is Deprivation Likely to be Challenged?

Local authorities look at both the timing and the intention behind any gift or transfer. Here are some situations where deprivation is likely to be questioned:

• Gifting a house after a diagnosis: If you transfer your home to a child or relative after you’ve been diagnosed with a condition like dementia, or after your care needs become clear, the local authority will almost certainly see this as deliberate deprivation.
  
  

• Large gifts shortly before a care assessment: Giving away substantial sums of money or assets in the months or even a few years before applying for care support is a red flag.
  
  

• Pattern of giving away assets as care needs increase: If your health is declining and you start transferring savings or property, the local authority will look closely at your motives.
  
  

• No clear reason for the gift other than to avoid care fees: If you can’t show another genuine reason for the transfer—such as helping a child buy a home, or a long-standing plan to share assets—the local authority may assume the purpose was to avoid charges.
  
  

• Sudden changes to property ownership: For example, changing from sole to joint ownership with an adult child, or adding someone to the deeds, especially if this wasn’t part of a long-term plan.

What Evidence Will the Local Authority Consider?

• The date of the gift or transfer.

• Your health and care needs at the time.

• Any correspondence or records showing your intentions.

• Patterns of giving—was this a one-off or part of a regular plan?

• Your financial situation before and after the gift.

• Whether you received anything in return for the asset (for example, selling your home to a child at below market value).

Consequences of Deliberate Deprivation

If the local authority decides you have deliberately deprived yourself of assets, they can still include the value in your means test. This means you may have to pay for your care as if you still owned the asset. In some cases, they can pursue the person who received the gift for payment, though this is less common.

This can be distressing for families, especially if the recipient of the gift has already spent or invested the money, or if there are disagreements between siblings about what’s fair.

Worked Examples

• After a Diagnosis:
  After being diagnosed with early-stage dementia, Mrs. Patel transfers her home to her son. Two years later, she needs residential care. The local authority investigates and finds the timing suspicious. They decide the transfer was deliberate deprivation, so they include the value of the home in their assessment. Mrs. Patel is treated as if she still owns the property and must pay the full cost of her care.
  
  

• Gifting Savings:
  Mr. Evans, aged 82, gives £50,000 to his daughter six months before moving into a care home, saying he wants to “see her enjoy it.” The local authority notes that Mr. Evans had recently been assessed as needing support at home and was aware his care needs were increasing. They decide the gift was made to reduce his assets for care fees, so they treat him as still having the £50,000.
  
  

• Long-Standing Gifts:
  Mrs. Green has given her grandchildren £2,000 each for their birthdays every year for the past decade. When she moves into care, the local authority sees this as a regular pattern and not deliberate deprivation, so these gifts are not challenged.

How to Avoid Problems

• Plan Early:
  Gifts made many years before care is needed are less likely to be challenged, but there’s no fixed “safe” period. The earlier you plan, the more likely it is that gifts will be seen as genuine.
  
  

• Document Your Intentions:
  Keep clear records of why you made a gift or transfer. If you’re helping a child buy a home, supporting a grandchild’s education, or following a family tradition, write it down and keep any correspondence.
  
  

• Only Give What You Can Afford:
  Don’t give away assets you might need for your own care or living costs. If you later need care, you may be left with too little to cover your needs.
  
  

• Be Honest with Your Family:
  Talk openly about your plans and the risks involved. This can help avoid misunderstandings and disputes later.
  
  

• Consider Other Planning Options:
  Sometimes, changing the way a property is owned (for example, tenants in common) or making a will can help protect some assets, but these steps have their own risks and limitations.

Emotional Realities

It’s natural to want to leave something behind for your loved ones, and the thought of losing the family home can be deeply upsetting. But trying to “give it all away” rarely works and can cause more harm than good—both financially and emotionally. Family relationships can be strained if gifts are challenged, or if one child is seen as favoured over others.

Key Takeaway

The best approach is to plan ahead, understand the rules, and make decisions that balance your care needs with your wishes for your family. There’s no one-size-fits-all answer, but being informed and realistic can help you protect your loved ones from unnecessary stress and disappointment.