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Gifting assets: what are the rules?

We explain the rules and legal implications of gifting assets, and transferring property, including the deliberate deprivation of assets.
5 min read
In this article
Repercussions of gifting assets  Gifting assets and a financial assessment Deliberate deprivation of assets When might disposal of assets be defined as ‘deliberate’? Non-deliberate deprivation of assets
Notional capital Powers of recovery Your right to appeal Seek legal advice

Repercussions of gifting assets 


The cost of care – residential care homes and nursing homes in particular – can be very high, so it’s understandable that some people might be tempted to ‘offload’ assets so that they’re excluded from the financial assessment.


You might think that ways to reduce assets could include:

  • gifting money or expensive items, such as a piece of jewellery that has recently been purchased, to family members or close friends
  • putting money into a trust or tying it up in some other way
  • spending out on extravagant holidays
  • gifting property by transferring it into someone else’s name
  • selling an asset, such as a property, to someone for less than its true worth.

But be warned – there are serious implications to ‘gifting assets’ in these ways, for both the person giving away the assets and the person receiving them. Here, we explain the rules for gifting assets, the consequences of doing this incorrectly and the legal implications of transferring property

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Gifting assets and a financial assessment

If your capital (savings and assets) is worth more than the following thresholds, you won’t be eligible for local authority funding and will have to pay for your own care.

  • £23,250 in England and Northern Ireland 
  • £28,500 in Scotland
  • £24,000 for home care or £50,000 for a care home in Wales

This will also be the case if you have a weekly income that’s high enough to cover your care fees.


For many people, their home is likely to be their most valuable asset. So it’s not unheard of for people to consider ‘gifting’ their property or other assets to a family member or friend when facing the financial assessment for residential care.


There are, however, strict rules that local authorities will pay close attention to when carrying out a financial assessment, so you may find it useful to get extra advice about this.

Use our calculator to find out how much you'll pay for care in your area and what financial support is available.

Deliberate deprivation of assets

Deliberate deprivation of assets is when the local authority deems that a person has deliberately disposed of assets to increase their eligibility for local authority funding.


When a local authority carries out a financial assessment for residential care it will ask about previously-owned assets, not just those that are owned currently. Remember that with a property, it’s quite easy for the authorities to check the ownership ‘trail’.


This might include giving away (gifting) assets, as well as other courses of action, such as selling an asset for less than its true value. For example, there have been cases of people ‘selling’ houses to a relative for a nominal fee such as £10, just so that they can transfer the legal ownership. If avoiding care costs is considered to be a significant reason for the disposal, then it may be considered a deprivation of assets.


When might disposal of assets be defined as ‘deliberate’?


When deciding if deprivation was ‘deliberate’ the local authority might look at the following aspects.

  • Motive/intention: when disposing of assets, was the main reason to avoid care charges?
  • Timing: there is no set time limit, although local authorities are unlikely to investigate too far back. Most importantly, they will look at the time between the person realising that they needed care and the disposing of assets.
  • Amount: was the gift a significant amount that would make a difference to your capital limit? The asset would have to be worth a significant amount for the local authority to pursue this action. Giving away a £300,000 property, for example, would significantly affect your total capital whereas smaller ‘gifts’ – such as giving a £300 ring to a granddaughter – are unlikely to prompt further investigation.

It all boils down to intention. When you made the gift, could you have reasonably known that you might need care? For example, if you fell ill, were assessed as needing residential care, then signed your property over to a relative the following week, that would look suspiciously like ‘deliberate deprivation’.

Non-deliberate deprivation of assets

Of course, not all disposals of assets are necessarily deliberate deprivation – it might have nothing to do with care, especially if there was no consideration of paying for the cost of care at that time.

  • You might want to give tax-free sums of money to children or grandchildren, so that you can enjoy seeing them spend it and to avoid Inheritance Tax.
  • You might also want to help family members who are struggling financially or splash out on a well-deserved ‘holiday of a lifetime’.
  • If you went on an extravagant cruise while you were still in good health and had no idea that you would need care, this might simply be regarded a post-retirement treat.

Notional capital

Giving away capital can therefore have serious consequences. If a person is found to have ‘deliberately deprived’ themselves of assets, the value of these assets can still be taken into account in the financial assessment, even though they no longer own them.


The value of the assets that they used to have is called ‘notional capital’. The value of a person’s notional capital can be added to their remaining assets to form their total financial assets for the financial assessment. So, in the example of transferring ownership of your home, not only could you end up having to pay for your care, you might no longer have a house to fund those costs.

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Powers of recovery

If the local authority funds someone’s residential care costs and later rules that a person has ‘deliberately deprived’ themselves of assets, they have the power to claim care costs from the person that the assets were transferred to.


Legally, local authorities have the power to recover costs by instituting County Court proceedings. However, a local authority should only do this after it has tried other reasonable alternatives to recover the debt.

Your right to appeal

The council’s decision must be reasonable and there is a right of appeal if you feel that an unfair decision has been made. If you want to make a complaint or appeal a decision, you should contact your local authority.



Seek legal advice


If you’re considering gifting any assets, particularly transfer of a property, you’ll need to seek legal advice to make sure it’s done properly. The Law Society has produced detailed guidelines for solicitors on gifts of property and their implications for long-term care. Make sure that any solicitor you speak to is aware of these guidelines.

Which? Legal
Talk to our legal team for personal advice on handing over your property and other assets to family or friends.

Further reading

Legal transfer of property

You can give your home to your children, even while you’re still living in it. But be aware of the complex rules.

Last updated: 22 Jun 2020