Why you need to avoid schemes that sound too good to be true
And how to avoid accusations of deliberate deprivation of assets
In last week’s blog we looked at social care, means testing and, in particular, the increase in the number of allegations of deliberate asset or income deprivation.
You can read more here but to quickly recap, anyone who has more than £23,250 in savings is classed as a self-funder. And if they need to go into residential care, the value of their home is also included in this calculation.
Quite understandably, people who have worked hard all their lives and paid their taxes, feel cheated when they are told that all social care is means tested.
Having someone from your local council nose through your bank records and scrutinise your finances feels like a violation of your privacy. And yet this is exactly what happens every time someone needs social care.
The local authority will carry out a financial assessment – the correct term for a means test – and they will trawl through your finances with or without your permission.
It’s no surprise that people, who a desperate to avoid their lifetime of savings disappearing in care home fees, often search for a way to stop this from happening.
There are many ways to lawfully protect your home and savings – effectively ring-fencing them from care home fees.
In fact, the team at Steene Law have a whole toolkit of legal solutions that we can use to help you.
There are also some unlawful methods of avoiding care home fees and, very sadly, there are some unscrupulous companies out there, who will take advantage of people’s vulnerability.
One high profile scam involved a now defunct company called Universal Wealth Management. It invited unsuspecting home owners to seminars up and down the country, promising to protect people’s assets from inheritance tax and care home fees. You can read more about the scandal here.
Although Universal Wealth is thankfully no longer trading, other companies continue to ply their dodgy services.
There are advertisements on the internet, offering Trusts, or a ‘Severance of Deeds’ supported by Will Trusts or Bonds.
These rather exotically named documents are often being sold as a rock solid way of protecting a person’s home and savings from future care home fees.
We heard recently of an elderly lady who was sold a trust so that she could avoid care home costs.
This poor lady was persuaded to pay £14,000, for a set of documents that turned out to be useless.
In our opinion, there is no difference between the salesman who sold her this worthless document and the person who knocks on your door offering to repair a few tiles, then gives you a hugely inflated bill and leaves you with a roof that still leaks!
In our experience, anybody of average means, who in their later years enters into a transaction that moves their assets away from their ownership, is likely to attract the attention of the Local Authority, in the event that they need social care.
The local authority can investigate your finances and go back many years. In fact there is no limit to how far they can go back.
If they find that you have set up a trust fund, they will check out the company that you have used to do so. And if this company has ever advertised their trust products as a way to avoid care homes fees, they will use this as evidence that you were deliberately attempting a deprivation of assets for this purpose.
An intention to avoid care fees need not be the sole or dominant reason, only a significant one.
What are the consequences of deliberate deprivation of assets?
The local authority will take action to recover the assets leading to heartache and anxiety, not to mention the additional cost of unravelling a useless trust.
If you are considering putting property into a trust, or you have completed a financial assessment and you are being accused of deliberate deprivation of income or capital, you need to call us.
It is important to seek legal advice before engaging in correspondence with the Local Authority.
Call us on 0203 653 0623 for a free conversation. We are available from 8am to 7pm, Monday to Friday.
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