Deprivation of Capital

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  • #22801
    lizzie3105
    Participant

    Currently have a claimant on benefit who has re-mortgaged his property jointly with his son, who does not live in the property and realised 100K. This has never gone into his bank account and went straight into his sons.

    Part of this money has been used to pay for his sons training on an aviation course to become a pilot. This left 24K which his son will use for medicals, exam costs, clearing debts and general living costs. Therefore the clmt states he will not receive any money and it is all being used for his son to obtain a qualification.

    The clmt is also paying the mortgage. He transfers money into his son’s account. The mortgage is then paid from the son’s account. Please note the clmt is able to do this as has a reasonable income due to a War Disablement Pension.

    What are your opinons on this? Could this be seen as deprivation of capital? Is it reasonable for the father to put himself in debt for the son?.

    #9638
    Anonymous
    Guest

    Lizzie
    You will also have to ask yourself the question “do I think he disposed of the capital in this way to get more CTB?”

    So you will have to try to discern his intentions, and perhaps take into account his previous knowledge of the CTB scheme. 8)

    I also have to say that, although I could not afford to go to these lengths, I have two adult sons – and I still have to put hand in pocket every now and then 😀

    #9639
    Ozzie Bird
    Participant

    Hi Lizzie
    I hope I’m correct in stating this, but if your claimant is over 60 years of age, then the rule regarding gifts to a third party which would have been counted as deprivation has been abolished. Apparently this is as per The Social Security (Housing Benefit, Council Tax Benefit, State Pension Credit and Miscellaneous Amendments) (No.3) Regulations 2004. I don’t know if this is any help or not.
    Jenni

    #9640
    Anonymous
    Guest

    Are you thinking of CTB Reg 37(2):

    [i:703eb5f743]”(2) A person who disposes of capital for the purpose of—

    (a) reducing or paying a debt owed by the claimant; or
    (b) purchasing goods or services if the expenditure was reasonable in the circumstances of the claimant´s case

    shall be regarded as not depriving himself of it”.[/i:703eb5f743]

    It used to say:

    [i:703eb5f743](2) A person who disposes of a capital resource shall be regarded as—

    (a) depriving himself of it if the disposal was by way of a gift to a third party;
    (b) not depriving himself of it if the diposal was for the purpose of:
    (i) reducing or paying a debt owed by the claimant; or
    (ii) purchasing goods or services if the expenditure was reasonable in the circumstances of the claimant´s case[/i:703eb5f743]

    The earlier version had the unfortunate unintended effect of saying that a gift is always deprivation in any circumstances. By taking away those words, the Reg now leaves it up the LA to decide each case on its merits, provided that repaid debts and reasonable expenditure are never treated as deprivation. So the position with gifts is that they might be deprivation – you have to judge on the facts of every case.

    #9641
    Ozzie Bird
    Participant

    Hi Peter
    From what I understand of my notes, the HBR 60+ reg 42 (2) and CTBR 60+ reg 34 (2) have been amended by the Social Security (HB, CTB, SPC and Miscellaneous Amendments) Reg 2004 in that since 6th October 2003, the rule that if the claimant or partner is aged 60+, gifts to a third party which had to be counted as deprivation (under the notional capital rule) has now been abolished. I’m not sure if I’ve interpreted this correctly, it’s a minefield out there!
    Jenni

    #9642
    Anonymous
    Guest

    That’s the right reference for the pre-2006 Regs – now Reg 37 in the renumbered CTB (persons who have attained…) Regs.

    The words that appeared to make it compulsory in every case for a gift to be treated as deprivation are no longer present. But that doesn’t mean that a gift can never be deprivation – the way the reg reads now, it doesn’t say anything about gifts at all. That means that gifts may or may not amount to deprivation – depends on the individual circumstances.

    #9643
    Ozzie Bird
    Participant

    Thank you for clearing that up for me, sorry to hijack your posting Lizzie.
    Jenni

    #9644
    Anonymous
    Guest

    You need to look at the whole chain here. The claimant has capital tied up in his house (disregarded)

    He realises that capital and it is now not disregarded, but at the same time, or shortly thereafter he deprives himself of it. It will be taken into account only if there was a significant operative purpose of securing entitlement to benefit.

    In this instance it is difficult to see how that significant operative purpose would operate. It sems to me that he realised the capital for one purpose only in order to help his son. I cant see how securing entitlement to benefit would be a significant operative purpose given that he was entitled to the disregard while the capital was tied up in his house.

    There may possibly be some future planning here in relation to avoiding paying care home charges at some future date, but that is not your problem.

    The burden of proof would be on your Sociail Services department if the situation should arise and it will be a heavy burden to carry

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