Is Deprivation of Assets a Criminal Offence?
Seeking care in later life can be expensive, and it is not uncommon for individuals to want to reduce the amount of money they are required to contribute to this. This is especially true in recent times due to the cost-of-living crisis, which may already be causing increased spending. However, there are both legal and illegal ways of doing this, and the lines between them are sometimes difficult to navigate,
Intentionally reducing the value of your estate ahead of a financial assessment to avoid having to contribute more to your care is illegal. If you are caught doing so, your contributions will be calculated based on the value of your estate prior to its deprivation of assets, and you may be prosecuted by your local authority.
However, local authorities usually refrain from taking legal action against individuals accused of deliberate deprivation unless absolutely necessary. Instead, the authority is more likely to approach you and discuss how you can resolve the issue in compliance with the law.
What is deprivation of assets?
A transferral of assets may be considered as deprivation if the intent of the action was to reduce the financial responsibility of an individual for their own care. There are many legitimate reasons for transferring assets, such as providing family members with gifts, but these must be done at the right times and for the right reasons to adhere to wills, trusts and estate law.
For example, an annual exemption of £3,000 is allocated to each individual in the UK. Any gifts given away that exceed this value will incur Inheritance Tax (IHT). Therefore, it is a common strategy to give away gifts yearly to reduce the amount of IHT payable on an individual's estate. However, if this is done to reduce the individual's responsibility to pay care costs, this will be considered deprivation of assets and is a criminal offence.
Deprivation of assets can be circumstantial and it is not uncommon for individuals to make the mistake of overlooking this legal requirement, so the local authority will most likely work with the individual to resolve this.
How is deprivation of assets decided?
The authority may find the transferral of assets to be suspicious if it is done ahead of a financial assessment. If the individual has made a large gift to a family member, transferred ownership of their property, or spent an unusual amount of money in a short period of time, they could be accused of deprivation of assets.
By law, individuals are required to state the value of their wealth during a financial assessment. If they are found to have incorrectly declared this value by leaving out elements of their estate, this will be considered a deprivation of assets and is a criminal offence.
When an authority conducts an assessment of a possible deprivation of assets, they will take each case on its own merits. For example, they will assess the intent and context of a large financial gift separately to that of a property transfer.
When doing so, the authority will look for the following points:
- How long ago was the gift or transferral made?
- What are the circumstances of the person who received the assets? Did they need them?
- Was there a pattern shared with other transferrals of the same type, or was it a one-off payment?
Each instance of deprivation of assets will be different and have unique circumstances, so the authority will apply each question and make a decision based on the context of the situation.
What are the legal repercussions of deliberate deprivation?
If an individual is found to have deliberately deprived their estate and the authority carries out the prosecution, the individual could incur a number of consequences, including:
- Valuing the estate at what it was prior to the deprivation, causing the individual to have to pay care fees with less of their finances intact.
- Declining to help the individual cover their care fees.
- Recovering assets that the individual previously transferred to avoid paying care fees.
How can I make a transferral of assets without it being considered a deprivation of assets?
If you are looking to transfer elements of your estate to other people, in order to help them or reduce your IHT bills, there are a number of methods to do so within compliance of the law. These can be complicated, so you should seek advice from legal professionals who can guide you through the entire process.
The team at Ramsdens Solicitors will be able to assess your situation, identify the best ways to manage your estate and walk you through every step. We are experts in the field of estate planning and will help you to organise yours while explaining everything along the way in easy-to-understand language.
We understand that estate planning and arranging social services care can be stressful, so we will work to minimise this stress and provide you with specialist legal advice that leaves you with the best result possible.
Speak to us today by calling 01484 821 500, or fill out an online contact form to arrange a call back.
Visit our Probate, Wills & Trusts section for information on our services relating to estate planning.