Deprivation of Assets & Care Fees: Lessons from a New Ombudsman Ruling

A recent decision by the Local Government & Social Care Ombudsman (LGSCO) highlights the importance of planning carefully when making gifts to family — particularly if there's any chance you or a loved one may need local authority care funding in the future.

The case involved a father who gave substantial financial gifts to his children before later requiring care. Norfolk County Council treated those gifts as if he still owned the money ('notional capital') — meaning he had to pay more towards his care costs. The Ombudsman ruled the Council made serious errors in how it assessed those gifts.

What Happened in the Case

• The father (Mr Y) gave large sums of money to his children, including one payment to help clear debts.
• When Mr Y later needed care, the Council decided he had 'deprived himself of assets' to avoid paying care fees — and included the gifted money in its financial assessment.
• His son (Mr X) appealed, but the Council's handling was poor: it didn't properly investigate the reasons for the gifts, failed to record how decisions were made, and missed its own published timescales.
• The Ombudsman found multiple faults and ordered the Council to: reassess the financial case from scratch; refund any overpaid care costs; pay £200 to Mr X and £100 to Mr Y for distress and delays; and train staff on the rules around 'deprivation of assets'.

Why This Matters for Families

This case is a clear warning: simply giving money away doesn't mean it's ignored in future care assessments. Local authorities can treat past gifts as if you still own them — forcing you to self-fund care.

• Timing is crucial — Gifts made when there's a reasonable expectation of needing care can be challenged.
• Intent matters — Councils look at why a gift was made. Helping a child in debt may be acceptable, but if avoiding care fees is a factor, they may class it as deprivation.
• Record your reasoning — Keep clear evidence of why and when gifts were made to defend your position later.
• Expect scrutiny — Councils don't always get it right; appeals can succeed if decisions are poorly reasoned.
• Plan ahead — Early financial and legal planning can reduce the risk significantly.