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One of the most common concerns families raise when a parent needs care is whether the family home and savings will be entirely consumed by care fees, leaving nothing behind for the next generation. With average UK residential care costs reaching approximately £5,200 per month in 2026, this is an entirely reasonable concern. There are legitimate ways to plan your estate to protect part of what you have built. There are also approaches that are clearly illegal, and a grey area of schemes sold by unregulated companies that frequently backfire. Understanding the difference is essential before taking any action, because the consequences of getting it wrong can be worse than doing nothing at all. This guide explains the care funding means test, what deprivation of assets means and when it applies, what approaches are legally sound, and what to avoid.
Before any discussion of protecting assets, it helps to understand exactly what the local authority assesses when calculating care fees.
| Capital level (England) | What happens |
|---|---|
| Above £23,250 | Full self-funder. Pay the entire cost of care from your own assets. The council provides no financial contribution. |
| Between £14,250 and £23,250 | Partial support. A tariff income is calculated on the assets between these thresholds. The council contributes the remainder alongside your pension and other income. |
| Below £14,250 | Full council funding for eligible needs. The resident still contributes pension and other income but the council covers the gap. |
Capital includes savings, investments, and in most cases the value of property, unless a spouse, civil partner, dependent child, or certain other qualifying relatives continue to live there. Income includes the State Pension, any private pension, and most benefits.
The 12-week property disregard: for the first 12 weeks of permanent residential care, the value of the home is excluded from the means test regardless of who lives there. After 12 weeks, it is included unless a qualifying person continues to live there. This gives families a short window to arrange a Deferred Payment Agreement or other arrangements before the property affects the assessment.
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Deprivation of assets occurs when a local authority concludes that a person has deliberately reduced their capital with the intention of avoiding care fees or reducing their care cost contribution. This is not a theoretical risk. Local authorities investigate thousands of cases every year and have real powers to act on their findings.
When deprivation is found, the council treats the person as if they still own the transferred asset. This is called notional capital. The practical consequence is that the person owes care fees they cannot pay, because they no longer own the asset that was supposed to generate them.
| Action | Could it be deprivation? | Key factor |
|---|---|---|
| Transferring property to a child | High risk | If care was foreseeable at the time, almost certain to be found as deliberate deprivation regardless of when the transfer happened |
| Giving away significant cash to family members | High risk | Particularly if the person was already frail, had a diagnosis, or was considering care options at the time |
| Putting assets into a lifetime trust specifically to avoid care fees | Very high risk | Councils are well aware of these products and investigate them routinely. The primary purpose test is applied. |
| Spending money on home improvements or holidays | Lower risk | Legitimate expenditure is not deprivation. The council must show deliberate intent, not just that money was spent. |
| Converting to tenants in common and making mirror wills with life interest trusts, done well in advance while both partners are healthy | Lower risk if done correctly | Must have legitimate estate planning purposes beyond care fee avoidance. Timing and documentation are critical. |
| Making a will that includes protective trust provisions | Generally legitimate | A will trust only takes effect on death. It does not constitute deliberate deprivation of the deceased's own assets during their lifetime. |
One of the most dangerous misconceptions in care fee planning is the belief that gifting assets and surviving seven years protects those assets from care fees, just as the seven-year rule works for inheritance tax.
This is completely wrong.
The seven-year rule exists in inheritance tax law under the Inheritance Tax Act 1984. It has no equivalent in care fee law. Under the Care Act 2014, local authorities can look back at asset transfers indefinitely. There is no time limit after which a transfer becomes safe from scrutiny.
What the council assesses is not elapsed time but intention and foreseeability. The questions asked are:
A transfer made ten years ago can still be found to be deliberate deprivation if the person was already frail or had a diagnosis when they made it. A transfer made two years ago may not be challenged if the person was entirely healthy and the transfer had other legitimate purposes.
| Approach | Legal? | Why | Risk level |
|---|---|---|---|
| Converting property to tenants in common and creating wills with life interest trust provisions, done while both partners are healthy and for clear estate planning purposes | Yes | A will trust operates after death, not during the person's lifetime. Widely recognised as legitimate estate planning by courts and solicitors. | Moderate if done late. Low if done early with multiple documented purposes. |
| Using a Lasting Power of Attorney to manage finances within the person's best interests | Yes | Legal management of finances is not deprivation provided decisions are in the person's best interests and properly documented. | Low |
| Renting out the property to generate income that reduces the deferred debt or supplements care costs | Yes | Entirely legitimate. Rental income will be counted in the means test but is not deprivation. | Low |
| Gifting the family home to children while continuing to live in it | Unlawful for care fee purposes | Almost always found as deliberate deprivation. Also creates a gift with reservation of benefit for inheritance tax, meaning it stays in the estate for IHT regardless of the seven-year rule. | Very high |
| Placing the family home into a lifetime asset protection trust sold as a care fee avoidance product | High risk of being found unlawful | These products are typically sold by unregulated companies. Councils investigate them routinely and frequently find deprivation. The Council of Property Practitioners and STEP both warn strongly against these schemes. | Very high |
| Deed of variation to redirect an inheritance away from a care home resident | Potentially, but not reliably | A deed of variation to redirect an inheritance the resident has not yet received can sometimes work, but councils can treat this as deprivation if the timing and intent suggest care fee avoidance. | Moderate |
| Making ordinary gifts and spending money on personal enjoyment, holidays, home improvements | Yes, within reason | Normal expenditure and gifts at customary levels are not deprivation. The council must prove deliberate intent to avoid fees. | Low |
For couples who own property together, converting from joint tenants to tenants in common and creating wills with life interest trust provisions is the most widely recognised legitimate approach to partial protection of the family home.
John and Margaret own a £300,000 home as tenants in common, 50 per cent each. John dies first with a will including a life interest trust. His £150,000 share passes into trust for their children, with Margaret having a life interest to remain in the home.
When Margaret later needs a care home, the means test only includes her £150,000 share plus her savings. John's £150,000 trust share is not assessable. The result is that at least half the property value is protected for the children regardless of how long Margaret remains in care.
Many families assume that if an asset has already been transferred, the worst the council can do is include it as notional capital in the means test. The reality is considerably more serious:
Warning about unregulated trust companies: a significant number of companies market products described as asset protection trusts, care fee avoidance trusts, or property protection plans. Many of these companies are not regulated by the FCA or the Solicitors Regulation Authority. The advisers making claims that their products will guarantee protection are often not legally qualified to do so. Both STEP (the Society of Trust and Estate Practitioners) and the Council of Licensed Conveyancers warn explicitly against these products. Only use a solicitor regulated by the SRA for any estate planning related to care fee protection.
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Understanding what the law permits and what crosses into unlawful territory is essential before taking any action. Senior Home Plus provides free, impartial guidance on care home options and funding routes, helping families understand the full picture before making any decisions.
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In theory, yes. If a person is a self-funder with assets above £23,250 including the property, the full cost of care must be paid from those assets until savings fall to the threshold. The family home is included in the assessment once the person has been in permanent residential care for more than 12 weeks, unless a qualifying relative continues to live there. However, a Deferred Payment Agreement means the home does not have to be sold during the person's lifetime. It only needs to be sold, or the debt paid from other sources, after death.
Only if the gift was made at a time when care was genuinely not foreseeable and for reasons other than avoiding care fees. A gift made when the person was already unwell, had a diagnosis, or was otherwise considering care options is almost certain to be found as deliberate deprivation. The council can treat the gifted money as notional capital and assess fees as if it had never been given away.
There is no specific safe amount in care fee law, unlike the annual gift exemption of £3,000 in inheritance tax law. Normal gifts at customary levels, birthdays, Christmas, helping with a house deposit made many years before care is needed, are not generally found to be deprivation. Large gifts made when care is already on the horizon are very likely to be challenged. Document the purpose of any significant gift and seek legal advice before making it.
A will remains valid when a person enters a care home. The estate on death will include whatever assets remain after care fees have been paid. If all assets have been used for care during the person's lifetime, the will may effectively be distributing very little. A Deferred Payment Agreement can preserve the property for the estate by delaying the need to sell during the person's lifetime.
A will only takes effect on death. It cannot protect your own assets from your own care fees during your lifetime. Leaving everything to your children in your will does not shield those assets from the means test while you are alive. The only legitimate way to ringfence part of the property using a will is through a life interest trust combined with tenants in common ownership, which takes effect on your death and protects your share for your partner and then your children.
Yes. Any inheritance received by a care home resident is counted as capital and will affect the means test. If the inheritance takes the resident above £23,250, they may lose local authority funding entirely and become a self-funder. A deed of variation can sometimes redirect an inheritance to other family members before the resident formally accepts it, but this carries deprivation of assets risk if the primary purpose is avoiding care fees. Specialist legal advice is essential before using this approach.
Equity release allows you to access the value of your home as a lump sum or income while remaining in it. The proceeds become accessible capital and will be assessed in any subsequent means test. Equity release does not shield assets from care fees. In some cases it makes the situation worse, because money released from property becomes liquid capital that may push assets above the self-funding threshold if they were previously below it.
Look for a solicitor who is a member of STEP (the Society of Trust and Estate Practitioners) or who specialises in private client law with a focus on elderly care and estate planning. Avoid any company or individual who is not regulated by the Solicitors Regulation Authority (SRA) and who makes guarantees that a particular arrangement will definitely protect assets from care fees. No responsible solicitor makes such guarantees because the council's response depends on the specific facts of each case.
Care home fees can significantly reduce the estate you leave behind. Local authorities can look back indefinitely at asset transfers and treat deliberately transferred assets as notional capital. The seven-year rule from inheritance tax law does not apply to care fees. The most widely recognised legitimate approach for couples is converting to tenants in common and creating wills with life interest trust provisions, done well in advance and with multiple documented purposes. Lifetime asset protection trusts sold specifically as care fee avoidance products carry very high risk of being found as deprivation. Any planning should be done with a regulated solicitor, as early as possible, and before care is foreseeable.
| East Midlands | Eastern | Isle of Man |
| London | North East | North West |
| Northern Ireland | Scotland | South East |
| South West | Wales | West Midlands |
| Yorkshire and the Humber |
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