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Letters

Dear ECA

I wonder if you could assist with a case I am currently involved with.

Due to increasing frailty an elderly farmer is vacating his farmhouse, to take up residence at a care home.

He is a widower and unless one of his sons, both of whom, have been working the farm along with their father, moves into the farmhouse, it will be empty.

Could you confirm that the whole property would be classified as "business interests", under the 'Income Support Regulations' and that assets of the business would be disregarded capital while the claimant is working and for a reasonable period after the claimant ceases working.

A further factor is that with most farmers in our area, although the farm might still be owned by the elderly father, the farm is worked as a partnership and there would be a tenancy of the whole to the partnership.

It is assumed that if the elderly farmer is cared for in a residential home, with little capital apart from the farm, there will be no question of farm land being sold but the question could arise under what circumstances the farmhouse might have to be sold.
If the farmer is joint owner of the farm, either with his wife or one or more of his children, it may be that the "joint tenancy" cases apply under which the value of a share would be minimal because there would be no market for the purchase of a share.

Could you please examine this situation with regard to the capital assessment for the purpose of paying residential care fees.

AR - Lancashire

Anne Edis replies:

The crux of this situation is what assets can be taken into account by the Local Authority when someone goes into residential care. The simple answer is all those assets which are owned solely by the elderly person regardless of who has the use of them.

The legal principles arise under the provisions of the National Health Service and Community Care Act 1990 which amends Sections 22 and 26 of the National Assistance Act 1948 which enable a Local Authority to recover the costs for the provision of residential care. This therefore enables the Local Authority to means test residents.

The fact of vacating the property to go into residential care means that if the farmer is a widower and the owner of the farmhouse then the value of the farmhouse together with all other assets in the farmers name will be taken into account. They are his capital assets regardless of the farming activities carried out upon the land by others. The term "business assets" has no meaning for the Local Authority - they will look solely at the market value of those assets. The criteria for their valuation is determined by the Charging for Residential Accommodation Guidelines. Recourse will also be made to the National Assistance (Assessment of Resources) Regulations 1992. There is incidentally no route to appeal to Local Authority financial assessment. The only route would be through the Complaints procedure.

Clearly therefore the issue raised means that there is a need to advise the local agricultural community of the need to protect their interests appropriately.

The question of Joint Tenancy is raised and again this is clearly dealt with under the rules. The standard disregard applies to the farmhouse whilst the spouse remains in occupation. Once she moves out then the half share of the property falls to be taken into account. Where the house is owned with another then the valuation rules will apply - namely that the authority will look at the nature of that share and will seek to see whether that share has a marketable value. This may produce a different "share" distribution to that of the benefits agency where is is assumed that any jointly owned property is deemed to be held in equal shares. However the palfrey case does illustrate circumstances where a nil valuation could be applied. the CRAG guidelines also show examples of how family owned assets could be held to have a nil value.

The Question therefore raises the need to ensure that not only is full advice given about the various ways in which agricultural property is owned for tax purposes but also now bear in mind the fact that if assets held are outside the current capital limits are in excess of £16,000 they will be taken into account in any financial assessment. For non cash assets that the value will be taken into account in any financial assessment. For non cash assets that value will be the market value less disposal costs.

Tenanted land does have a market value and of course because it is land it may also be subjected to a charge under section 22 of the Health and Social Services and Society Security Act 1983. It needs to be borne in mind that where the owner dies before land is disposed of the interest begins to run from the date of death.

So it really is a question of raising clients awareness of these issues. ECA

With the increasing focus on the affairs of the Elderly it is good to find books like that of Denzil Lush, the Master of the Court of Protection appearing. There has been a distinct shortfall in the availability of published material relating to this area of practice.

This volume is a valuable handbook for the busy practitioner because it not only summarises the demographic issues but points the way to the relevant legislation. More significantly it highlights a number of professional and ethical issues which are overlooked, particularly when there is pressure from the younger generation on the family assets. The precedent documents serve not only as timely reminders of some of these issues but also provide a library on which to develop this increasingly important area of work. Myths and folklore exist out in the community in the fields of conservation and deprivation of assets, and this handbook is significant in the way in which it enables practitioners to handle the many issues which arise, in a balanced and professional manner. By flagging up the issue of deliberate disposal of assets in order to create artificial poverty and dependence on the State. Denzil Lush, has done the profession a service in enabling these issues to be clearly identified. It will, therefore, enable practitioners to give proper and balanced advice to this increasingly important client base. The book is therefore to be welcomed for the clear guidance which it gives in a field which is currently poorly documented.

Reference to particular cases is helpful as are the worked examples. However, this volume should not be viewed as the only source of information in the field but as an important Vade Mecum in this growing area of work. The availability of the precedents on disc will be helpful, not only to those firms which are seeking to build up their precedent library but also for those with a well established system for the way in which new issues particularly medical and ethical issues are highlighted.
All in all this volume and the forthcoming one on Community Care are to be welcomed.

Anne Edis TEP, Solicitor, freelance writer and Consultant in the fields of the Elderly Client and Community Care.

In the next issue of ECA Anne will be providing a review of Margaret Richards new book, Community Care for Older People - rights remedies and finances.