Care Act: Deprivation Of Capital - Is The Local Government Ombudsman Getting It Right On Deprivation Decisions?

• Published date: 29 October 2020
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Family and Matrimonial, Wills/ Intestacy/ Estate Planning
• Law Firm: Wrigleys Solicitors
• Author: Mr Austin Thornton

Is the LGO making the right call with complaints around deprivation of capital? We look at two recent decisions which have raised concern.

Two recent Local Government and Social Care Ombudsman (LGO) decisions allow us an insight into current thinking at the LGO about the right approach to deciding whether a person has deprived themselves of capital for the purpose of reducing their care fees liability. Analysis of these cases appears to expose some weaknesses in the Care & Support statutory guidance

Sefton Metropolitan Borough Council (19 016 142) - severing a joint tenancy can amount to a deprivation of capital

In July 2017, Mr & Mrs C instructed solicitors to prepare Wills and sever the joint tenancy. The severance was completed on 1 Dec 2017.

Mr C's Will provided that his share should pass to a Will Trust for the benefit of his children with a life interest for Mrs C. Mr C died in April 2018.

In June 2017 Mrs C was admitted to hospital after a fall. She had a series of health complaints and was awaiting dementia screening. She became a permanent resident in a care home in mid-October 2018.

The LGO decision explains that council decided Mrs C should be treated as possessing the full value of the house and not just her own half share. The LGO report says:

"Noting the timing of the severance of tenancy and Mrs C's health and care needs [the council] considered care home fees must have formed part of financial planning of the family at the relevant time, forming part of the decision-making process. It said the question for it was whether it could be determined that it was in the reasonable contemplation of Mrs C in transferring the property that placement in long-term care was a foreseeable consequence of her care needs: it considered the proximity of the property transfer to the admission to the care home was relevant."

The LGO found no maladministration. It explained its reasoning as follows:

"The Council took account of Mrs C's health and support needs and of the timing of the severance of the tenancy, and it did not make its decision in ignorance of any material facts. I am satisfied the Council acted without administrative fault in deciding to treat Mrs C as having deprived herself of assets."

This decision by the council and by the Ombudsman is plainly wrong.

Whether or not Mr & Mrs C consulted together on whether to sever the joint tenancy to avoid care fees, a joint tenancy is severed unilaterally. It does not require both joint owners to agree. Mr C decided to sever the joint tenancy. It was his act and intention that upon his death, his share in the property should pass into a Will Trust. He signed a Will to that effect. The council's decision therefore offended the basic principle that it is the resources of the resident that are taken into account, not the resources of a couple. The council appears to have considered that Mrs C could and should have stopped Mr C from taking this action. There is no obligation upon a resident or prospective resident to influence another person who holds assets beneficially, to benefit the resident.

Secondly, Mrs C cannot be said to have deprived herself of a resource. Whilst Mrs C owned Mr C's part of the house legally, this was upon a trust.¹ She never owned her husband's share beneficially. Therefore she had no resource to deprive herself of.

The council's argument was presumably that if she hadn't planned with her husband to split the joint tenancy, she would have inherited his share. Clearly however, the prospective benefits of one's spouse dying first are a matter for the person with the beneficial interest. They are not capital, nor income, nor notional capital or income within the meaning of the charging regulations.

This case shows the danger for the LGO or local authorities deciding cases based on the very limited support given in the statutory guidance. The statutory guidance assumes a certain level of basic legal training for the local authority departments that use it. It is not and cannot be a comprehensive statement of the law. A decision maker who relies solely upon the statutory guidance may go badly wrong, as in this case.

Tameside Metropolitan Borough Council (19 014 246)

Following a fall at home resulting in an admission to hospital, 98 year old Mrs X executed an LPA and also transferred her home to her daughter. The trust document stated that the reason for the transfer was to ensure Mrs X's mother's wishes for the property were followed and to provide her with peace of mind about the settlement during her lifetime.

Mrs X moved into residential care and requested assistance with her fees in November 2018. The council determined that she had deprived herself of capital being the value of the...