I’m handling my late uncle’s estate and I’ve recently been made aware of a ‘deferred payment arrangement’ with his local council amounting to approximately £16,000.
I asked for a copy of the DPA but it’s unsigned and I’ve also discovered that no legal charge was made by the council. The council has not formally asked for payment.
A friend has told me that despite the DPA being unsigned and no legal charge has been made, I will still have to pay it, as there’s been an ‘implied contract’. Can you give me some help?
Dilemma over bill: Do I have to reimburse council £16k of my late uncle’s care fees even though the contract was unsigned?
Tanya Jefferies, of This is Money, replies: Uncertainty over whether your uncle owed such a large bill is bound to concern you if you hold the legal responsibility to wind up his estate.
We asked a lawyer to explain how deferred payment arrangements for care fees work, why your uncle’s document might have ended up unsigned, and what your duty is when sorting out his estate.
James Urquhart-Burton, partner at Ridley & Hall Solicitors, replies: A deferred payment agreement is a form of financial assistance offered by local authorities to people who are legally responsible to fund their own care because they have more than £23,250 in capital assets, but that capital is ‘locked up’ in their home.
James Urquhart-Burton: ‘Should you decide to reimburse the local authority its contribution, ask for a full breakdown of the care charges’
The DPA enables the local authority to ‘disregard’ the value of the resident’s main home and to pay a contribution to their care home fees, on the basis that it will place a legal charge on the property and recover the payments from the sale, normally after the resident’s death.
You haven’t said whether your uncle had capital assets in excess of £23,250, but for now I will assume that he did and this is why the local authority appears to have entertained the idea of a DPA in the first place.
The DPA is a contract. If there is no evidence that your uncle or his representative agreed the terms of the contract (such as by signing it) then the DPA is unenforceable.
Also, on the basis the local authority did not place a legal charge on the property, its debt is not secured and it cannot recover the money automatically from the sale of your uncle’s property.
The DPA document might have ended up unsigned because your uncle wasn’t in a position to do it himself when he needed care, and no one else had the legal right to do so on his behalf, but the local authority still made payments to ensure that the care provider’s bill was paid and his care needs could still be met.
The question is, can the local authority still try to recover the money it contributed to your uncle’s care fees?
What is the local authority likely to do in these circumstances?
The Care Act 2014 allows a local authority to take a debt action to the county court in order to recover contributions it has made towards the cost of care and support.
As your uncle has sadly passed away, the claim would be brought against his estate.
It is, of course, for the local authority to take such action and if it hasn’t requested payment as you say, then you could do nothing.
However, given the financial pressures that local authorities are under, it seems likely that it will pursue your uncle’s estate for this money at some point.
It has a period of six years to take legal action, which is a very long time for you to live with the uncertainty.
What action could you take now, and what are the risks?
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
I am not aware of all of the specifics, but if my assumption about your uncle’s financial means is correct, then you could say that the local authority has funded his care to ensure his needs were being met, in circumstances where your uncle had the capital to fund his care (albeit that capital was locked away in his house).
You may feel that this gives rise to a moral obligation to repay, notwithstanding any legal one.
You do not say in what capacity you are handling your late uncle’s estate, but I assume that you are either the executor of his will, or the administrator under the rules of intestacy if he left no will.
As such, it is your duty to deal with the liabilities of the estate, so you would need to be satisfied that it is OK for you to distribute the estate to avoid incurring liability yourself in relation to any claim the local authority may have against the estate.
In other words, if you as executor or administrator hand out all your uncle’s assets to his beneficiaries without addressing this possible debt first, you could end up on the hook for the £16,000 yourself in future.
Another option is to approach the local authority, bring to its attention the fact that the DPA is unenforceable and ask it to confirm its position in relation to the contributions it made.
Should you decide to reimburse the local authority its contribution, ask for a full breakdown of the care charges, as well as a copy of the financial assessment undertaken for your late uncle, so that you can ascertain that the charges were properly incurred.
You may choose to explore whether the local authority is willing to agree a reduced sum in settlement of the dispute, particularly if it is at fault in any way.
If in doubt, seek advice from a solicitor who specialises in debt recovery.