When planning for future care needs—whether for yourself or a family member—understanding how deprivation of assets works is essential. Many people explore ways to protect their wealth, but certain actions can unintentionally breach the rules and lead to serious consequences.
This article explains what deprivation of assets is, how local authorities assess it, and how to plan safely and legitimately.
1. The Care Fees Means Test
In England, your eligibility for local authority funding is based on a financial assessment. If you have more than £23,250 (England and Northern Ireland), £35,500 (Scotland), and £50,000 (Wales), in savings, investments, or other assessable assets, you will normally be required to self‑fund your care.
These thresholds apply whether you receive care at home or move into residential care.
2. What Is Deprivation of Assets?
Deprivation of assets occurs when someone deliberately reduces their wealth—for example, by giving money or property away—to avoid paying care fees.
Local authorities look closely at:
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Why the asset was given away
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When the gift or transfer took place
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Whether care needs were foreseeable at the time
If they conclude that the intention was to avoid care charges, they can treat the person as if they still own the asset, even if it has been gifted.
3. Common Misconceptions
Many people say:
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“I’ll just give my money to my children.”
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“I’ll hide my savings.”
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“I’ll transfer my home to my family.”
However, if the motivation is to avoid paying for care, these actions are almost always classed as deprivation of assets.
Courts and local authorities have dealt with numerous cases where gifts were reversed or ignored because the intention was clear.
4. Legitimate Reasons for Giving Assets Away
Not all gifting is deprivation. There are legitimate planning reasons, including:
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Inheritance tax planning
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Long‑term wealth transfer
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Regular gifting within normal expenditure
However, the inheritance tax threshold is £325,000, and only gifts made for genuine tax‑planning purposes—not to avoid care fees—are accepted.
If your total estate is below the inheritance tax threshold, local authorities are unlikely to accept “IHT planning” as a valid reason for giving assets away.
5. Timing Matters
The most important factor is when you make the gift.
If you are:
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healthy,
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financially independent, and
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have no foreseeable care needs,
then gifting can be legitimate.
But once you develop a condition, illness, or circumstances that make future care likely, gifting becomes risky. At that point, local authorities may argue that you should have anticipated care needs, and any transfer could be treated as deprivation.
6. Plan Early and Safely
Asset protection must be done early, ideally before retirement and certainly before any decline in health.
Good planning includes:
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reviewing your estate
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considering long‑term care needs
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making gifts while healthy
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using legitimate tax‑efficient strategies
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seeking professional advice
You’ve worked hard for your wealth, and it’s natural to want to support your children and grandchildren. The key is to plan before care becomes a foreseeable need.
7. Key Takeaways
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If you have more than £23,250, you will usually self‑fund your care.
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Giving assets away to avoid care fees is deprivation of assets.
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Local authorities can treat you as still owning the gifted asset.
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Legitimate inheritance tax planning is allowed—but only when genuinely needed.
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Plan early while healthy to avoid problems later.
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