Nursing Home Fees – Anti Avoidance and making the family pay

There are many ways for Local Authorities to recoup the cost of long term care from residents or their families. Most people will be aware that major gifts of property or money made by an elderly person will come under scrutiny in the event that long term care is needed later.

The political debate rages on about how fair it is to charge prudent savers for their care, or force people to sell cherished homes to pay these charges. In a time of parsimony, it is highly unlikely that this policy will change in the near future.

Families receiving assets from someone who later goes into care can be called upon to pay the fees themselves. To do this, the local authority needs to show that the patient transferred the monies "knowingly and with the intention of avoiding charges". Another way a local authority can achieve this is to make the patient bankrupt, then gifts of property or assets can sometimes be set aside - again leaving family members to pay the care fees.

Sometimes clients will approach an adviser to try to manage their affairs so as to avoid paying care fees - thereby immediately putting themselves in the category exposed to a clawback of fees from recipients of their largesse. It is then very difficult to develop a legal strategy which will work - and a savings or insurance based plan has to be looked at with appropriate financial advice.

Any hint that part of the motivation for a transfer of assets was, or could have been due to concern about care fees will be a smoking gun for the diligent local authority. The decided cases on this are fairly draconian, with the court in one instance ordering payments from a family member many years after the transfer of the family home took place.

However, it's important to remember that this is a two stage test. The local authority has to show: -

1. a transfer, and
2. that the transfer was more likely than not carried out with a knowing intention to avoid.

In a recent case handled by Wards, a family was able to keep the money which had been distributed to them by an elderly lady on sale of her house - precisely because the court held that there was no intention on her part to avoid care fees.

All the evidence supported the family's position that the question of care charges simply did not arise, and had no influence on the motivation of the elderly relative. Paying for care had never been discussed with the patient, within the family or by healthcare professionals. Her motivation in making the gifts she made was demonstrably unaffected by any consideration of care fees.

These were unusual facts, but the family held firm and backed the case through to a trial, where their stance was vindicated by the court.

The local authority ended up picking up both sides' costs at the end of the case. The patient is now being reassessed financially to establish what fees she should pay from the resources she has left.

With increasing publicity surrounding these issues, it will be a rare case where it is possible to demonstrate with such clarity that a transfer was made without any such intention.

It's for the local authority to show that it was more likely than not that any transfer took place with the intention to avoid paying fees - and if the evidence shouts out against such a conclusion, then claims against family members can be resisted.

James Taylor is an Associate Solicitor with Wards Solicitors.