Gifting Assets to Avoid Care Home Fees? Why the "7-Year Rule" Doesn't Work

I’m increasingly hearing from clients and contacts gifting assets to “avoid care fees.” 

Most believe that if they gift property or savings and survive 7 years, they’re in the clear. They’re not. 

The 7-year rule applies to inheritance tax, not local authority care funding. Councils - including both Leicestershire City Council and Warwickshire County Council - don’t apply a time limit. They look at intent, not just dates. If they believe the gift was made to reduce care costs, they can:

• Count the assets as “notional capital” in means-testing
• Refuse to fund care
• Even pursue repayment 

Leicester City Council's own guidance warns clearly: “If we find that you have given away assets to reduce your contribution… we will treat you as still having them.” 

As local authorities get sharper in their investigations, professional advice around estate planning becomes even more important. If you’re thinking about care home fee planning and want advice on the ‘do’s and don’ts’ or if your advising clients on gifting, trusts, or care funding strategy - and want a second opinion or structured input - please get in touch.