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Deprivation – what are your options ? Tish Hanifan Barrister Joint Chairman

Deprivation – what are your options ? Tish Hanifan Barrister Joint Chairman Society of Later Life Advisers NAFAO Annual Conference April 2013. Deliberate Deprivation. Charging for Residential Guidelines [CRAG]

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Deprivation – what are your options ? Tish Hanifan Barrister Joint Chairman

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  1. Deprivation – what are your options ? • Tish Hanifan • Barrister • Joint Chairman • Society of Later Life Advisers • NAFAO Annual Conference • April 2013

  2. Deliberate Deprivation Charging for Residential Guidelines [CRAG] 6.062 The LA may consider that a resident has deprived himself of a capital asset in order to reduce his accommodation charge. If this is the case the LA may treat the resident as still possessing the asset. • Notional Capital Rules [Reg 25[1] • Resident must prove they no longer possess the asset • Deliberate Deprivation : • Timing - 6.064 'the gift was made at a time and in circumstances in which the donor was in good health and did not anticipate care'. • Motivation : Avoiding care fees must be a Significant factor but does not need to be the main reason

  3. Examples [6.067] • Lump-sum payment to third party • Substantial expenditure has been incurred (e.g. on an expensive holiday) • The title deeds of a property have been transferred to someone else • Money has been put into a trust which cannot be revoked [ Treatment of Trusts CRAG section 10 ] • • Money has been converted into another form which would fall to be disregarded (e.g. personal possessionsor Investment Bonds

  4. Investment Bonds • Social Security Commissioners decision R (IS) 7/98 :an investment bond falls within the CRAG disregard by virtue of it’s intrinsic nature as a policy of life assurance. [The AOR are largely based on Income Support Regulations ] • CRAG 6.004 to be disregarded an investment bond must be written as one or more life insurance policies that contain cashing-in rights by way of options for total or partial surrender • CRAG 6.005 Income from investment bonds, with or without life assurance, is taken into account in the financial assessment for residential accommodation • Underlying capital from which this derives is disregarded

  5. Gifting Assets What guidance is available for Solicitors ? • Gifts of Property : Implications for future liability to pay for long-term care [Guidelines for solicitors prepared by Mental Health and Disability Committee] • Replaced by Making gifts of assets practice note – 16 July 2009 • Lifetime Gifting and Use of Trusts • Gifting by Will

  6. Motivation Subjective and Objective motivation Judicial Interpretation • Yule v South Lanarkshire Council (1999) • R V Fife ex parte Robertson [2000] Compare these with : • Dorset v Beeson [2002] • Other reasons for transfer eg Council House purchase

  7. Will Trusts • Severance of joint tenancy [ this is not deliberate deprivation even though carried out in lifetime] • Tenants in Common [ proportionate share can vary] • Law of Property Act1925 s36(2) allows unilateral severance provided it is communicated and in writing • Law of Property Act 1925 s196 : Recipient’s capacity is irrelevant • Takes effect only on death of one of the parties • Allows some control as to outcome of bequest in excess of an outright gift

  8. Inter VivosTrusts and Deliberate Deprivation • Transfer of assets into a trust may constitute Deliberate Deprivation (CRAG 6.067) • The motivation for the transfer only has to be a “significant reason “ not the main reason • Alternative Reasons for creation of lifetime trust : Inheritance Tax Asset Protection from impact of death, relationship breakdown and insolvency of family member Provision for vulnerable family member [eg disabled child of donor] Preventing need for intervention by Court of Protection

  9. Treatment of Trusts • Was trust established inter vivos or by will ? • Deliberate deprivation considerations relating to establishment of the trust [ Why was this done ?] • Guidance is contained in CRAG Chapter 10 on how to treat assets already in a trust [ once deprivation issue determined ] • Personal Injury Trusts disregarded • Discretionary Trusts :must not assume notional capital or Income • Interest in Possession Trusts : will include the income or capital in the means test [NB not both if the income is derived from the assessed capital]

  10. Getting it Right • Evidential Basis for Decision • Documented and reasoned grounds for decision essential to prevent legal challenges • CRAG references • Burden of Proof - who has to prove what ? • Beneficial and/or Equitable interest eg partial shared ownership or claim for “rights in relation to property • Procedural matters

  11. Enforcement • Health and Social Services and Social Security Adjudications Act 1983(HASSASSAA) section 21 “the 6 month rule “ • (HASSASSAA 1983) Section 22 ; Charge on a property where resident owns a property and fails to pay the assessed charge • A charge is created by the LA declaring in writing that the charge is being created. • Joint ownership creates an interest in the proceeds of sale not the property itself and LA must in such cases register a Caution • Insolvency Act 1986

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