Deprivation – what are your options ?
Tish Hanifan
Joint Chairman
Society of Later Life Advisers
NAFAO Annual Conference
April 2013
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
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
possessions or Investment Bonds
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
• 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
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
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
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
• Takes effect only on death of one of the parties
• Allows some control as to outcome of bequest in excess
of an outright gift
Inter Vivos Trusts and Deliberate
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
Preventing need for intervention by Court of Protection
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
• 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]
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
• 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
• Insolvency Act 1986

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