Can You Give Away Assets to Avoid Care Home Fees?

The 7-Year Rule Is a Myth

Let's get this out of the way first, because it's the most dangerous piece of misinformation in this area.

There is no 7-year rule for care home fees.

The 7-year rule comes from inheritance tax law. If you give assets away and survive 7 years, those gifts fall outside your estate for inheritance tax purposes. That's real, but it has nothing to do with care home fees.

Care home deprivation law is governed by Section 70 of the Care Act 2014. That law has no time limit written into it. There is no date after which a transfer becomes automatically safe. Councils have pursued transfers made 10 or even 15 years earlier when the circumstances suggested deliberate avoidance.

This doesn't mean every old transfer is at risk. What it does mean is that time alone won't protect you. What actually matters is far more specific, and more defensible, than most people realise.

What Is Deprivation of Assets?

Deprivation of assets is the legal term for when someone deliberately reduces their assets to avoid paying for care.

The statutory guidance directs councils to consider the following factors in the circumstances at the time of the disposal:

This three-part test is your most important protection, and it's why the circumstances of a transfer matter far more than its timing.

What Counts as Deprivation

Some transfers are almost certain to be treated as deprivation:

Giving Away Large Sums Shortly Before Care

If you transfer significant assets (cash, property, investments) within months of needing care, and you were already showing health problems at the time, councils will treat this as deliberate avoidance.

Putting Your House Into a Trust After a Diagnosis

Asset protection trusts are widely marketed by solicitors as a way to shield your home from care fees. But if you set one up after a diagnosis, after a fall, or at a point where care was foreseeable, the council will likely treat it as deprivation. The timing undermines the entire structure.

Giving Away Everything at Once

A sudden, unusual transfer of your entire savings with no documented reason, close to the point of needing care, is one of the clearest signs of deliberate avoidance.

What Doesn't Count as Deprivation

Not every transfer is treated as deprivation. Councils must consider legitimate reasons for financial decisions.

Spending Money on Yourself

Personal spending is not automatically exempt. Ordinary living costs and genuine purchases are different from deliberately reducing capital to avoid care charges. The council must consider the purpose, timing and circumstances, including what was reasonably foreseeable at the time.

Consistent Lifetime Gifting

If you have given money to children regularly over decades (for birthdays, weddings, helping with deposits), continuing that pattern is defensible. The council has to show your motivation was care avoidance, which is difficult when the behaviour predates any health concerns by years.

Helping Family in Genuine Hardship

If you gave money to a child who was facing bankruptcy or losing their home, and you were in good health at the time, councils will struggle to argue avoiding care costs was your main motivation.

Charitable Giving

Charitable giving with a documented history is generally safer than family transfers, particularly if the charity was one you had supported for years.

Transfers Made When Young and Healthy

If you gave assets away a decade or more ago and were completely well at the time, the council has to show you were already thinking about care, which becomes increasingly implausible the further back the transfer was.

What Councils Can Actually Do

If a council decides a transfer was deprivation, they have several powers under Section 70 of the Care Act 2014.

They Can Treat You as if You Still Own the Assets

Your financial assessment is calculated as though the transferred assets never left your ownership. If giving away £200,000 would have taken you below the self-funding threshold, the council simply ignores the transfer and continues to assess you as having that money.

They Can Chase the Person Who Received the Gift

This is the part most families don't realise. The person who received the transferred assets can be made personally liable to the council for the difference in fees. Their liability is capped at the value of what they received, so if you gave your son £100,000 and he received all of it, the council can pursue him for up to £100,000.

Debt Recovery Must Follow the Legal Process

A deprivation decision does not automatically create a charge against a transferred property. The council may pursue a legally recoverable debt through the appropriate process, including court action where justified. Any security and priority depend on the legal position; the council does not automatically rank ahead of every other creditor.

They Can Pursue Your Estate After Death

If you die with an outstanding deprivation debt, the council can claim against your estate. Your executors must pay the council before any inheritance is distributed to your family.

Does Putting Your House in a Trust Work?

Asset protection trusts are widely sold as a way to put your home beyond the reach of care fees. The honest answer is: it depends almost entirely on when you do it.

When Trusts Are Legitimate

If you set up a trust when you are young, healthy, and there is no foreseeable care need, as part of genuine long-term estate planning, it is a legitimate legal structure. Many people do this in their 50s or early 60s as part of sensible financial planning.

When Trusts Become Deprivation

If you set up a trust after a diagnosis, following a fall or decline, or at a point where you could reasonably foresee needing care, the council will almost certainly treat it as deprivation. The legal structure of the trust doesn't protect you. The timing destroys the argument.

Be Cautious of Marketing

Be cautious about solicitors who actively market these arrangements to older people. The arrangement may be legal in isolation, but the circumstances around it may not be.

What Actually Protects You Legally

The most reliable ways to reduce what you pay for care, without the risk of deprivation, are:

1. Keep Evidence of Genuine Spending

Keep records explaining significant purchases and their purpose. Personal spending can still be examined if there is a question of deliberate deprivation. Do not assume that spending quickly before an assessment protects money from the means test.

2. Make a Deferred Payment Agreement

This is a formal arrangement with the council where your care fees are paid against the value of your home, recovered when it is eventually sold. You get the care you need without selling your home during your lifetime. It is the government's own recommended solution for people with property.

Learn more about Deferred Payment Agreements →

3. Plan Early

If you want to give assets to family, do it when you are young and healthy, document your reasons clearly, and maintain a consistent pattern over many years. The further your transfer is from any foreseeable care need, the harder it is for the council to prove intent.

4. Get Proper Legal Advice

A solicitor who specialises in social care law can help you understand what is and isn't defensible in your specific situation. Don't rely on general financial advice or internet forums.

How to Challenge a Deprivation Decision

If a council decides a transfer was deprivation and you believe they are wrong, you have a clear route to challenge.

1. Request Written Justification

The council must set out in writing why they believe the transfer was deprivation and which elements of the three-part test they say are satisfied. If they cannot do this clearly, their decision is on weak ground.

2. Make a Formal Complaint

Every council has a formal complaints process. Use it. Set out why you believe the three-part test has not been met: what your health was at the time, what your documented reasons were, why care avoidance was not a significant motivation.

3. Escalate to the Local Government and Social Care Ombudsman

If the council does not resolve your complaint, the Ombudsman can investigate. This is free, independent, and councils take it seriously.

4. Seek Legal Advice

A social care solicitor can advise on whether you have grounds to challenge, and can write to the council on your behalf. Many cases are resolved at this stage without going to court.