Take Care With Deliberate Deprivation of Assets if Paying for Long Term Care
As consumers move through the process of qualifying, or trying to qualify, for help paying their long term care bills, they often try to find a way to offset the rising costs of their healthcare. In the past it was believed that this meant that consumers could sell off or gift away their big or valuable assets to loved ones or family. It was believe that this would help during financial assessment because the assets would not be included in the means test when trying to get financial assistance in paying for long term care. This was the consumer’s way of trying to do everything possible to get their local authority to pick up the tab as much as possible on their cost of long term care, since their assets had been liquidated, or close to liquidated. This was referred to as disregarded capital, or deliberate deprivation of assets and this method was used to offset the cost of long term care by getting the local authority to pay for care. Using deliberate deprivation of assets is not acceptable when trying to get help paying for long term care and can result in an investigation.
Local authorities do now have the ability to investigate the selling off or gifting of the valuable assets of those elderly consumers who are seeking help paying for their long term care. That means the local authorities can investigate where the assets went and the reasons behind the gifting or selling of those assets. The disposal of assets right before a means test, deprivation of assets, is illegal when it is determined that the assets were sold or gifted for the sole reason of avoiding paying for long term care. Of course, like with most other rules, there are some loopholes around using deliberate deprivation of assets during the means testing process.
Loopholes
There are instances in which the elderly really do want to give away their assets to family and friends and they do so with legitimate and sincere intentions. They may want to mitigate their inheritance tax liability for their respective beneficiaries. They are not using this disregarded capital as a way to get the local authority to pay for their long term care. For this reason, the consumer would be obligated to prove that this was the reason for the transfer of their property or asset.
Examples of deliberate deprivation of assets
There are several different examples of disregarded capital or deliberate deprivation of assets, that can be used leading up to the local authority’s means testing. The most common of these including putting money into a trust, making larger purchases to help reduce the amount in savings, transferring deeds to include the name of a family member or friend, and giving away large sums of money to family and friends. These are examples of the ways in which consumers have used deprivation of assets most often in the past. It is very important to take note of the timing of any of these exchanges, of course if they took place right before the means test to help pay for long term care, they are far more suspicious in the investigation. It can work in your benefit if they took place before it was known that long term care would be needed.
It is wise for you to speak with a long term care adviser if you are thinking about selling off any assets or liquidating any of your investments, properties, or other assets. You want to ensure that those transfers will not negatively impact you during a means test if you do find out that you will need long term care in the future. Abusing the system by using the deliberate deprivation of assets method as a way to get the local authority to pay for your long term care will be investigated if found out.