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The costs of care home fees are exceptionally high and ever increasing. This has led to people becoming, understandably, increasingly concerned that the cost of care will eat away at their assets which they worked hard for their whole life.
Usually, this takes the form of an individual intending on providing their children or grandchildren with inheritance, but they are concerned that they will require care when they become elderly or incapable of looking after themselves and the financial consequences of this.
It is a common misconception that simply placing assets, such as the family home, into a lifetime trust will avoid care fees altogether and that care homes cannot access the funds tied up in the trust in order to pay for care fees. This is usually considered by local authorities as deliberately depriving yourself of assets in order to avoid footing the bill of care home fees.
The Local Government and Social Care Ombudsmen (‘the Ombudsmen’), responsible for regulating our local councils and social care providers, has recently made an important decision on deprivation of assets to avoid care fees which acts as a cautionary tale.
On 28th April 2026, a decision was published in the matter of Stoke on Trent City Council (‘the Council’) and the pseudonymous Mrs Y. The Council made the decision that Mrs Y was deliberately depriving herself of assets. This was because Mrs Y bought into the aforementioned misconception about protecting her assets by placing them into a discretionary trust.
Following a fall and hospital stay, a care assessment was conducted of Mrs Y which recommended that she needed 24 hour residential care. As part of the assessment, a financial assessment was also conducted to evaluate her assets in order to pay for the care which included the discretionary trust deed. The Council followed mandatory procedure to ignore the value of her property for the first 12 weeks of care (commonly referred to as the 12 week rule). However, once this time has passed, Local Authorities can begin to consider the patient’s property value in their financial assessment. Upon assessment of the trust deed, the Council concluded, amongst other reasoning, that Mrs Y had purposely deprived herself of assets, namely of her property.
The Council’s main reasoning for their conclusion is that Mrs Y had long term health issues so she should have known that care and the associated fees were inevitable, especially as she was receiving the highest rate of attendance allowance in benefits. After some further investigation, the Council discovered, unsurprisingly, that the trust was set up with the sole intention of protecting against care fees. They also cited reasoning that the organisation who drafted the deed market their trusts deeds to do just that. Mrs Y also had further complicating family circumstances which supported the Council’s conclusion.
Mrs Y’s granddaughter complained to the Ombudsmen about the Council’s decision. However, the Ombudsmen dismissed her complaint and upheld the Council's conclusion. The Ombudsmen found that the Council did no wrong by deciding that Mrs Y had intentionally deprived herself of assets thereby indirectly finding that Mrs Y had indeed deprived herself of assets. In their recently published decision, the Ombudsmen helpfully set out three questions Local Authorities must ask themselves in assessing whether an individual has intentionally deprived themselves of assets: has the person had a reasonable expectation of needing care, did they have a reasonable expectation of needing to contribute towards the cost of care, and whether the aim of avoiding care costs was a significant motivating factor when disposing of an asset.
This demonstrates the Local Authorities’ power. Authorities across the country will no doubt be emboldened by this decision that they are well within their rights to tap into assets held within lifetime trusts in order to pay for an individual’s care home fees.
There may be other options for protecting your assets, such as protection in Wills. If you are concerned, please get in touch with our specialist Private Client Team by either calling on 01384 410410 or use our online enquiry form.