Deed of Variation, deliberate deprivation and RPI indexation

Have members experienced the situation in the context of care fees means testing where an intestacy has been varied to create a discretionary trust with an IOU?

Deceased died in Nov 2001. In Dec 2002 a deed of variation severing the joint tenancy and creating a notional will giving £10k each to two daughters and £120k into discretionary trust with widow and daughters and charities among the class of beneficiaries. Loan agreement for £120k index linked.

Widow now in care. Do members expect the local authority to claim this amounted to deliberate deprivation despite it being over 20 years ago? Property is being sold and the trust will be populated with the original £120k and the accrued interest.

On a separate note, would members treat the indexation as applying from the date of the agreement or from the date of death - the D of V containing the normal reading back provisions?

Michael McCabe
Galloways Accounting Private Client Limited.

My understanding is deliberate deprivation means intent to remove assets to avoid care fees, at a time when it was “reasonably forseeable” care might need funding. A Local Authority might struggle to prove a case for treating it as notional capital.

AgeUK website contains this statement which appears to be in line with Iain’s comment:

"What counts as deprivation of assets?

Deprivation of assets applies when you intentionally reduce your assets, such as money, property or income, so these won’t be included when the council calculates how much you need to pay towards the care you receive.

When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider two things:

  1. You must have known at the time you got rid of your property or money that you needed or may need care and support
  2. Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings."

Malcolm Finney