Trusts and anti-avoidance under the Care Act 2014
The ageing English population is likely to generate increased demand for social care, which “supports people of all ages with certain physical, cognitive or age-related conditions in carrying out personal care or domestic routines”. Local authorities can seek contributions from capable individuals towards the direct costs of social care by assessing relevant capital and income, which “can give rise to heated social and political debate about the scope of the ‘Welfare State’ and the extent to which it was expected to provide free care from the cradle to the grave.” The Care Act 2014 sought, inter alia, to limit the amount that one person can be expected to contribute towards his or her lifetime care costs, albeit that a £72,000 cap due in April 2016 has been delayed until April 2020. Despite the Care Act’s reforms, many individuals will be expected to contribute a significant sum towards care costs once its funding provisions have fully commenced, even if such costs are ultimately borne by their estates after death. While the threshold below which means-tested help is provided was to increase to £118,000 from £23,250 in April 2016, there were a number of significant limitations on the cap’s effect even before the delay was announced. This continuing potential liability is likely to lead to attempts to shield assets, including via declarations of trust, from local authorities in order to provide for dependants and others (including informal carers) who would have a legitimate claim to the care recipient’s estate. This article’s aim is to evaluate the Care Act 2014’s anti-avoidance provisions, particularly whether the Act achieves an adequate balance between ensuring that the costs of necessary care are equitably distributed and protecting the property-related interests of care recipients and those who would otherwise be the beneficial recipients of their assets. It includes an analysis of those provisions in light of similar mechanisms in other areas of the law applicable to individuals in a familial context. Whatever the inherent difficulties in a doctrinal legal scholar’s questioning the structure and funding model of a social care system, this article will argue that the anti-avoidance provisions in the Care Act 2014 are very broadly drawn, and that the Act over-relies on discretion and statutory guidance to ensure that local authorities exercise anti-avoidance powers in a nuanced manner. It demonstrates that incorporating care fee avoidance into financial planning risks being both ineffectual and expensive.