A report by the Local Government Ombudsman said the woman gifted the cash to her relatives in 2019, following the sale of her home as she moved into sheltered accommodation.
She later requested help from Wakefield Council to pay for her care, as her needs became “greater” after she contracted Covid.
But the council ruled she had given away the £66,000 “deliberately to avoid care costs,” the Ombudsman said.
The woman’s family disputed that decision, but the Ombudsman, which rules on such matters, said it had found “no fault” with how the council dealt with the issue.
The report told how the woman started receiving low-level care in her own home in August 2018, which she paid for herself, before she moved into sheltered accommodation several months later.
When she sold her house in May 2019, she gave some cash from the proceeds to her family.
Months later she was admitted to hospital, during which time she became infected with Covid-19 and after being discharged in July 2020, she needed more help with daily tasks.
The council however, said the woman would have to meet the costs of the care herself, because the money she’d given away was a gift.
Under national law, those with capital or savings worth £23,250 or more are expected to pay for their own social care.
Those with less only pay an assessed contribution, depending on how much money they have.
The report detailed how the the family argued that the woman had “no intention to deprive herself of assets” and claimed the council hadn’t properly considered the timing or the “intention” behind the payments.
They also said that the woman’s specific needs could not have been foreseen at the time of the gift and that she thought she had sufficient funds for her care before Covid-19.
However, the council stood by its decision and the Ombudsman has said it was satisfied with how the matter was treated.
The report summarised: “Local authorities should ensure people are not rewarded for trying to avoid paying their assessed contribution.
“Councils must therefore assess a person to determine whether they have intentionally deprived themselves of assets to avoid paying care fees.”
Nichola Esmond, the council’s service director for older people, said: “We work to a fair charging policy for all of the service users that we are here to support.
“We work closely with residents and their families as we recognise the impact of social care needs on people’s financial circumstances.”
The funding of social care has drawn scrutiny in recent years, with councils repeatedly calling on the government to bring forward a long-awaited bill, detailing how it will be paid for in the coming years.
Boris Johnson insisted he had a plan for social care when he became Prime Minister in 2019, but it is yet to appear.
In the meantime, local authorities have had to raise their own taxes themselves to cover costs.