Did you know that your local council can claw back money it provides for your care fees? 
It can do this if it believes you gave away assets to avoid paying the full cost of your care. 
If you need residential care your council could claw back the cost - older couple looking out of a windows

Local authority assessments 

If you reach a point where you need residential care your local authority carries out an assessment. They then decide how much you should pay towards the cost of your care. 
If you have assets above a certain level and don’t need nursing care, you will usually have to pay all the costs yourself. This causes many people to worry about what they can leave for their loved ones when they die. 
Some people are tempted to pass on assets such as money, property or income before they move into residential care. However, even if you no longer have these assets, your council can claw back the money it believes you should pay. 
The Local Government and Social Care Ombudsman has said several local authorities haven’t followed the assessment process properly. There have been examples of unsupported assumptions about the reasons gifts are given. In some cases, they haven’t provided any explanation or evidence to show that families have deliberately tried to avoid care fees. The Ombudsman has issued guidance, but concerns remain about getting the balance right. 

Deliberate avoidance 

If you give assets to your family members or friends your council could see this as a deliberate act to avoid paying your care fees. However, some gifts are allowed that won’t affect your Inheritance Tax position. So, how do councils make their decisions? 
One factor is timing. Your assessment will look at when you gave away assets. If the council considers you should reasonably have expected to need care and support you could fail their test. However, their decision must include all the facts and give clear reasons. 
So, if you are fit and healthy, and don’t anticipate needing care and support, you could reasonably give away some of your assets. 
In one example, a 91-year-old man gave £9,000 in cash gifts to his family. He gave £3,000 to his grandson for his wedding and to buy a house, and £2,000 to his son-in-law in Australia for cancer treatment. Sadly, his son-in-law later died. He gave a further £4,000 so his bereaved daughter could visit the UK and for his other daughter to travel to Australia. A month later, he suffered a fall and had to move into a care home. The local authority decided he had intentionally reduced his assets. 
However, the Ombudsman said the local authority had not provided a logical explanation. At the time the gentleman gave the gifts he didn’t expect to move into permanent residential care. 

Acceptable gifts 

Baroness Altmann, former pensions minister, said: “Giving grandchildren gifts, paying for weddings or cancer treatment is a natural part of family life. For councils to suggest this is somehow not allowed is outrageous”. 
The Ombudsman doesn’t have enforcement powers but can recommend improvements and actions to put things right when local authorities make poor decisions. Recommendations can include compensation payments. Even when someone is in a care home, they can spend their money on things other than their care, including giving gifts to friends and family. 
Please get in touch if you would like to discuss planning for your care and making gifts to your loved ones. 
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