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 possessions or 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 Vivos Trusts 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