The deprivation of asset rules and the challenges we encounter

We are living in a time of misconceived entitlement.

As the UK gets wealthier, the expectation of much of the wider population, in relation to what they are ‘owed’ or ‘deserve,’ grows with it.

We often get telephone calls from the children of elderly parents saying ‘Mum wants to transfer the house to me so that she doesn’t lose it all paying for care.’ Their argument being ‘she has paid her taxes and National Insurance contributions all her life, so society should look after her.’

If only that were true.

Clients in their late 80s remember the war years; food rationing, a lack of credit, times when you had to save hard to buy something that you wanted. They often say to me ‘I don’t want my children to go through those difficult times.’ So, how do we find a balance between gifting and clients retaining enough savings for themselves?

Historically, the father was the head of the family, he brought in the wages, allocated housekeeping to his wife, to pay for food and the children, and retained a sum for himself and his treats.

Society has moved on and this is no longer the ‘norm,’ but did anyone anticipate that as we progressed towards a more equal society that we would travel a road where many feel ‘entitled’ to everything, whether or not they have the money to pay for it or have put in any effort for it?

The rules

One has to wonder if the government anticipated this changing attitude when they brought in the deprivation of asset rules. Did they introduce these rules, intended to try and prevent elderly family members from giving away their hard-earned money, as a way of protecting them, from themselves? From their generosity of spirit, their wish to help their children, from the ‘bank of mum and dad’.

In many cases, the deprivation of asset rules is seen as unfavourable, for taking away the inheritance to which children are entitled. But, as I see it, if the money belongs to the parent, and it is their life’s work, then surely it is for the whole of their life, until they pass away.

For children who grumble about losing their inheritance to the payment of care fees, the answer may be that we have to revert to earlier times, where elderly parents lived with their children, who met their care needs, for just those last few years of their parents’ life?

The local authority, the NHS, and the adult social care teams do a fantastic job, but should they be taking the place of the children? I think it all comes back to the feeling of ‘entitlement.’ In many cases, the children may have had a much easier life than their parents; they don’t want to give up their social life, their coffee mornings, their golf, their holidays, and their parents don’t want them to. But they can’t have it both ways!

The deprivation of asset rules allows the parent requiring care to retain between £14,250 to £23,250 of their savings, and only at this point do they get help with local authority funding.

Conclusion

When I meet with the parents, without the children who tend to call me initially, I ask them ‘how much did you pay for your house all those years ago?’ The response is often a much smaller amount than its value today. It might have been a council house that they bought at a discount from the local authority. I explain to them that this uplift in today’s value has not been paid for by them, they have not paid any tax on it, the value has increased because of the wealth of the nation.

If you think about it logically, in many cases the current allowance is sufficient to cover the initial purchase price of that old family home that they have lived in all their life, brought their children up in, and enjoyed family gatherings.

Unless the children and grandchildren start fending for themselves, rather than expecting financial windfalls when their parents die, the struggle for parents may continue.

Fiona M. Ashworth is a solicitor in the wills and estates team at Thompson Smith and Puxon
tsplegal.com