Yes Doodledog, if Mr D died, not having needed care, and left his half share to the children, that would be theirs and would not be taken into account if you subsequently needed care. Similarly with any money or other assets he had left to them in his will. And the positions of A, B and C and the children are as you describe.
It’s entirely fair and reasonable for a couple to split their assets between them and this has not, so far as I’m aware, been criticised here. If they were to divorce there would likely be a 50/50 split. There is no wrongdoing at all.
No, it’s probably not fair that A has spent all her money on designer clothes and flash holidays and the taxpayer pays for her care. And it’s probably not fair that a couple have split their assets and the taxpayer bails them out too. Nor, probably is it fair that the very prudent B is subsiding both of them and her children inherit very little. But we will never, in the foreseeable future, have a system which requires nobody to pay for their care other than through their taxes. Then we will be asking if it’s fair that a stay at home mother who has hardly worked at all outside the home, even after her children had flown the nest, should receive care at the expense of those who had worked full time from leaving school until (even after) retirement age. There never will be ‘fair’ unless we descend into a communist state. Spare me from that!
).