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

By Marcus Perks, Independent Financial Adviser | Supportive Financial Planning.

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 (Decision 24 013 283 – Norfolk County Council) 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 and ordered it to apologise, pay compensation, and redo the financial assessment.

For families thinking about helping children financially or planning to pay for future care, this is a timely reminder: gifting assets can have unintended consequences if not handled properly.

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 with new staff.

  • Refund any overpaid care costs.

  • Pay £200 to Mr X and £100 to Mr Y for distress and delays.

  • Train staff on the rules around “deprivation of assets” under the Care Act 2014.

  • Review its appeal process to ensure clear reasoning and timely responses.
    
    

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.

Key takeaways for anyone planning:

• 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 risks and protect your family.

Planning Ahead: How We Can Help

Navigating social care funding rules alongside estate and tax planning can be complex — especially when you want to help your children financially but also protect your own future.

At Supportive Financial Planning, we can help you:

✅ Understand how care means-testing works under the Care Act 2014.

✅ Explore legitimate ways to support loved ones while reducing future exposure to care fees.

✅ Keep robust records of your intentions to strengthen your position if questioned later.

✅ Integrate care fee planning with wider estate and inheritance tax strategies.

Speak to Us

Don’t leave future care funding — or your children’s inheritance — to chance.

📞 Call us on 0345 337 3414

📧 Email cliveperks@supportivefp.co.uk

🌐 Or request a free consultation via our “schedule a call” button.

A little planning today can save your family stress, uncertainty, and potentially thousands of pounds tomorrow.

This article is for information only and does not constitute financial advice. Care funding rules and thresholds are subject to change. Figures and case details are correct as of October 2025. Source: Local Government & Social Care Ombudsman, Decision 24 013 283.