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Deprivation of capital due to claimants given his own home to his children
Hi
Client is 88 year old receiving attendance allowance, private pension and top up Pension credit. A few years ago he gave his own home to his children as he suspected he was going to be diagnosed with Alzheimer. He continued to live in the property up to now but due to his ill health is looking to move into a housing association property which is more suitable for his needs and for which he would need to claim HB.
Client’s daughter is concerned that PC and HB would deem that client has notional capital once he has moved out.
I have advised that the central question in deprivation cases is whether the claimant intended to deprive himself of capital so as to secure entitlement to benefit. The claimant must have had this in mind as a “significant operative purpose”.I’d argue that client did not give the property to his children with the intention to keep his PC or indeed to one day potentially be able to claim HB.
Any thoughts would be appreciated.
If he were doing this now, I think there would be problems - why not sell his home and use the proceeds to purchase something more suitable? A living will/power of attorney can get around a future loss of capacity and ensure that a person’s needs are catered for etc.
However, the fact that you say this happened “a few years ago” ought to be enough to protect him (assuming it does turn out to be a few years and not last year). Difficult to see how the authorities could argue that the operative purpose was to secure entitlement to benefit when there has been no claim for benefit until several years later and he did not (and could not have) foresee at the time the future change in circumstances that has made the claims necessary…...
Thank you for your response.
Claimant’s daughter has confirmed that the property was passed to her name and that of her siblings 4 years ago.
Am I overthinking it in considering whether Pension Credit may argue that client should have informed them when he gave the property to his children and when he moves into the new property can PC argue that client would have notional capital above the £10,000 limit?
Thank you very much again.
If Pension Credit is already in payment, then one imagines they have investigated this to their satisfaction already? Assuming that it was declared.
And if there is an award of GPC, then there will be passporting to HB.
...the property was passed to her name and that of her siblings 4 years ago.
Am I overthinking it in considering whether Pension Credit may argue that client should have informed them when he gave the property to his children….
2 questions.
Did he have a mortgage?
Was he (is he) in an AIP?
I always start with “... and could you tell me how capital impacts your Pension Credit?” or similar. If you don’t know anything about capital limits (and the onus will largely be on DWP to show that you do) then benefit gain cannot be a significant operative purpose.
1) Client’s daughter believes claimant did not inform PC that he passed his property to his children.
2) Claimant did not have a mortgage at the time.
3) We don’t know yet if he was ( or is) in an AIP.
Am I overthinking it in considering whether Pension Credit may argue that client should have informed them when he gave the property to his children and when he moves into the new property can PC argue that client would have notional capital above the £10,000 limit?
I can’t see why claimant would be expected to inform Pension Credit of this. When he owned the house and was living there it fell to be ignored as capital. When he transferred ownership it was legally no longer his. Therefore there had been no impact on his capital so there was nothing to report.
In considering whether it now falls to be treated as notional capital under deprivation rules the question of motive has to be considered as others have said. Problem is difficulty of proving what was known or not known at the time. Although it might be said that he didn’t know that he was going to have to move out so having the purpose of claiming benefits cannot apply, the question is bound to be asked why he chose to pass it on at that time rather than simply leaving it in his will.
Although it might be said that he didn’t know that he was going to have to move out so having the purpose of claiming benefits cannot apply, the question is bound to be asked why he chose to pass it on at that time rather than simply leaving it in his will.
inheritance tax planning is quite possibly relevant, dependant on the value of the house at the time (and now). he may well have had some legal/financial advice at the time and (if he has capacity now) he can authorise you to ask his advisers. should it be necessary to do so.
Although it might be said that he didn’t know that he was going to have to move out so having the purpose of claiming benefits cannot apply, the question is bound to be asked why he chose to pass it on at that time rather than simply leaving it in his will.
inheritance tax planning is quite possibly relevant, dependant on the value of the house at the time (and now). he may well have had some legal/financial advice at the time and (if he has capacity now) he can authorise you to ask his advisers. should it be necessary to do so.
It does sound as though this was more likely to have been an attempt to avoid inheritance tax - although my recollection of private client law is that HMRC will treat him as still owning the property for IH purposes as long as he is living there because he still has the benefit of the property. But from a welfare benefits point of view, as Ianb noted previously, while he was living in the property it wouldn’t be counted as capital anyway - regardless of ownership, so it does seem likely that he’ll be able to argue that benefits (especially HB) weren’t a consideration at all when ownership was transferred (four years ago).
On the point about the transfer happening ‘a while ago’. There is no such thing as a safe period which acts as a free pass as it were (see R (IS) 7/98, para’12.3). It is always about intention. So, you need to dig into past events and intentions quite forensically and build a case from its foundations. That there was no significant operative purpose at the time to gain a benefit entitlement well into the future cannot be assumed or taken for granted. It has to be established, just like any other case.
1) Client’s daughter believes claimant did not inform PC that he passed his property to his children.
2) Claimant did not have a mortgage at the time.
3) We don’t know yet if he was ( or is) in an AIP.
Looking at his age I am assuming he doesn’t need to report any changes in his capital as he may have an open-ended AIP?
you say he suspected he had alzheimers
does he in fact have some form of dementia, and can he himself remember what he did and why he did it.
my thinking is that if he doesn’t know and can’t remember, it’s going to be very difficult for anyone to show one way or the other (short of getting copies of any professional advice received) what he was thinking/what his intentions were.
On the point about the transfer happening ‘a while ago’. There is no such thing as a safe period which acts as a free pass as it were (see R (IS) 7/98, para’12.3). It is always about intention. So, you need to dig into past events and intentions quite forensically and build a case from its foundations. That there was no significant operative purpose at the time to gain a benefit entitlement well into the future cannot be assumed or taken for granted. It has to be established, just like any other case.
This is a good point. But it is getting close to suggesting that it is the claimant who has a case to prove. Just as there is no safe period, there is no presumption that any deprivation of capital triggers the notional capital rule under Reg 49(1) HB Regs. If it goes to tribunal then the local authority (and DWP) will have to present evidence that getting benefits was a “significant operative purpose” in disposing of the capital. And in this respect, it’s quite likely that the only evidence about the claimant’s state of mind at the time he deprived himself is likely to be got from his own statement, and from inference.
But to get back to the original question; this was about the claimant’s children being concerned about whether the claimant will be able to get HB and PC when he moves. In this sort of situation (assuming the claimant wants the advice) I’d be inclined to advise them that the outcome will depend on the facts and evidence of their case - and that they can at least be comforted by the fact that they can always sell the property and give their father his money back if necessary. Looking at the original post again, the claimant gave away his home because he was worried that he might be getting Alzheimer’s. Is it just me being cynical, or does that sound more like somebody trying to dispose of capital so they don’t have to pay care costs?
“This is a good point. But it is getting close to suggesting that it is the claimant who has a case to prove.”
Not at all. It is about being able to rebut the DWP’s assertions. More than one commissioner has cautioned that the civil courts’ burden of proof principle does not really apply in social security appeal tribunals to any great degree due to those tribunals having inquisitorial functions.
Even if the DWP make a notional capital decision and the case goes to tribunal the tribunal will still want to take evidence of the claimant’s intention even if the DWP cannot provide any real substantive evidence to back up its assertions. In every notional capital case I’ve done this has always happened. If the DWP has little or no substantive evidence then the tribunal only has to accept the claimant’s word. If he’s credible he’ll win.
Thank you very much for your responses. At present I only had conversations with client’s daughter who initially asked us the question but didn’t expect the advice to be as complex…
I have a feeling that they’ll wait until he has moved out and HB has made a decision which he can then appeal. I shall let you all know the outcome of the HB decision when we have one.