This topic looks at the main pros and cons of formal status when it comes to managing someone else’s money or property-related affairs. That might be deputyship or a power of attorney in England and Wales.
Having a formal status for money management for another, usually removes the risk of being regarded as acting directly for oneself, in a personal sense, when contracting; thus if one had a formal status, one would generally be seen as acting only as an agent – whether appointed by the person, when they had capacity, or given the status by a court or a statute, for the person benefiting from the manager’s help, not as a directly liable contracting party…
Suitable Person status (for running a social care direct payment) and DWP Appointee status are exceptions to this rule, though, because they do not amount to agency FOR the other person, but only a statutory power to manage the money , conferred by legislation.
Formal status usually carries with it access to some help, when one hits difficulties – the Public Guardian’s office, for instance, will be helpful to attorneys if they need a steer as to the options. But the CoP and OPG are struggling with a vast backlog, and loads of complaints… Appointees and Suitable Persons can need help, but if they do, they may have to buy it, as there is no-one formally there to help them.
Formal representatives are bound by rules which protect the client against abuse and risk, and sometimes these rules constrain their freedom to do overly ‘innovative’ things with the money – like hedge funds, for instance! These rules could be seen as good or bad! The rules are only as good as the regulator’s system, and appointeeship abuse has long been a problem which the DWP have only recently begun to address. Some of these roles carry a risk of legal liability for wrong-doing, but that is only right and proper, given the context. There might be civil redress for breach of contract or trust, or criminal action brought under the Fraud Act 2006 for deliberate dishonest misuse of monies.
There are fees attached to obtaining formal status for incapacitated people – registering a power of attorney, or applying for deputyship, for instance. There are court fees every time one needs to ask for permission for particular steps….and it all takes TIME.
What does the Public Guardian do?
The role of the Public Guardian is to protect people, who lack capacity, from abuse.
The Public Guardian, supported by the Office of the Public Guardian, helps protect people who lack capacity by:
- Setting up and managing a register of Lasting Powers of Attorney (LPA);
- Setting up and managing a register of Enduring Powers of Attorney (EPA);
- Setting up and managing a register of court orders that appoint Deputies;
- Supervising Deputies, working with other relevant organisations (for example, social services, if the person who lacks capacity is receiving social care);
- Instructing Court of Protection Visitors to visit people who may lack mental capacity to make particular decisions and those who have formal powers to act on their behalf such as Deputies;
- Receiving reports from Attorneys acting under LPAs and from Deputies; and
- Providing reports to the COP, as requested, and dealing with cases where there are concerns raised about the way in which Attorneys or Deputies are carrying out their duties.
The role of the Court of Protection
The Court of Protection has the powers to:
- decide whether a person has capacity to make a particular decision for themselves;
- make declarations, decisions or orders on financial or welfare matters affecting people who lack capacity to make such decisions;
- appoint deputies to make decisions for people lacking capacity to make those decisions;
- decide whether an LPA or EPA is valid, if someone challenges that; and
- remove deputies or attorneys who fail to carry out their duties, if someone challenges them, and
- hear cases concerning objections to register an LPA or EPA
Acting as someone’s agent – informally, but lawfully
- The donor must have mental capacity and can only grant the power of attorney to do things that they have the right and capacity to do themselves in the first place.
- If the only power you would like to give someone is to operate your bank account, you should just write to your bank. Many banks have their own form – a form for third party mandate – which they will ask you to complete and return to them.
- If you are temporarily unable to collect your benefit and it is normally paid into your bank or building society account, you should write to your bank or building society, asking them to give temporary power to someone else to operate your account. If your benefit is normally paid by cheque, you can fill in the back of the cheque to allow someone else to cash it for you. If you want the agent to cash a benefit cheque for you on a regular basis, you should contact the office that deals with your benefits payments to let them know.
- All such powers as these cease on the becoming incapacitated by the donor – i.e. incapacitated to revoke the power.
Conferring of a written power to act as someone’s agent – Ordinary Power of Attorney
- These are usually created for a set period of time in cases where the Donor is going abroad or is unable to act for some other reason and wishes someone else to have the authority to act on his or her behalf. The authority granted can be general, or limited to specific affairs – for example, to operate a bank account, to buy and sell property or to change investments.
- An Ordinary Power of Attorney will usually end either at a specified time or upon the request of the Donor at any time using a Deed of Revocation and will automatically be revoked if the Donor loses mental capacity. There is no requirement for an Ordinary Power of Attorney to be registered.
- If you want to make a limited power of attorney you should make sure that it is drawn up very carefully so that the attorney is very clear about what authority they have to deal with your affairs. It should be signed and witnessed and dated.
- Unless it has been agreed with your Attorney, the Attorney isn’t entitled to charge for his/her services, although s/he would be entitled to reimbursement for out-of-pocket expenses.
- An Attorney cannot normally perform ‘for you’ in any of your roles as a trustee or as a personal representative (i.e. administrator) of someone’s estate. An Attorney cannot drive your car, take tests for you, sign your Will, take action concerning your marriage or delegate your Power of Attorney to anyone else.
Revoking agency or ordinary power of attorney
- You have to write or type out a document stating your intent to revoke the power of attorney. If creating your own document, the following items must be included: your full legal name, current date, the date the original power of attorney was given, and a statement that you are of “sound mind.”
- List the name or names of the people designated as your agent or for the original power of attorney and state your wish to revoke the original authorisation or document.
- Sign and date the document, preferably in the presence of a witness. Have the witness sign his or her name, adding his or her address and the date below the signature.
- Write “REVOKED” at the top or across the text of your original document, and sign and date, to avoid having it used in an unauthorized manner.
- Send copies of the revocation document to government entities, banks, hospitals and any other institutions that need the updated information, including the attorney!
Formal status – DWP Appointeeship under regulation 33 of the Social Security (Claims and Payments) Regulations1987 (as amended)
- Confers statutory power on a person to claim and manage another’s benefits – and to keep the DWP notified of changes in the person’s position
- A power to pay bills, and use the money for the person’s well-being.
- Not a power to manage the person’s other money, like an inheritance, a trust fund, a lottery win, or earnings.
- Not a power to manage the person’s personal bank account, if s/he ever had enough capacity to have one
- Not a power to sign new contracts for them, as an agent with power to bind the person. That means that if appointees are contracting for services for an incapacitated adult, they are doing it in their own name.
- Appointees can pledge the credit of the individual for new goods or services contracts, because they do have lawful access to the person’s benefits money.
- But these days, that’s not likely to be enough to satisfy a provider, and secondly, the money is now very likely to be being paid into a bank account in the appointee’s own name – making the appointee the legal owner, on paper, but legally as nominee for the actual beneficiary – more like a trustee, now.
- Corporate appointeeship means the organisation (i.e. the council or a provider) acts in a private fiduciary relationship for each individual – the money must be kept separate from the organisation’s own money.
Procedure for appointment – the DWP manual says this:
The customer must be visited by a visiting officer to make sure:
– they are incapable of managing their affairs and
– an appointee is required and
- the prospective appointee (if one has been nominated) must be interviewed to make sure they are suitable and willing to act.
The customer must, because of mental incapacity (or, exceptionally, severe physical disability), be incapable of managing their affairs. If challenged the DWP must be able to justify their decision to make an appointment. And at all times they must be able to provide the necessary paperwork to show that they followed departmental procedures.
Ending appointeeships – DWP internal guidance
There are three circumstances where an appointment can be revoked:
- If the appointee does not act appropriately within the terms under which the appointment was granted, an officer acting on behalf of the Secretary of State can revoke their authority
- If there is sufficient evidence that the customer is capable of acting for themselves and does not need an appointee to act for them over their benefit affairs
- Where the appointee himself becomes incapable. Where the Secretary of State is satisfied that this is the case – standard evidence considerations apply – he should take normal action to appoint a replacement.
“NB. When allegations of abuse are received it is essential that we react quickly. If there is abuse then any delay will compound the problem. The Secretary of State needs to be seen to be taking any allegations seriously. His responsibility is to ensure that the benefit being paid to the appointee is being used for the benefit of the customer and if that is in question then he needs to take appropriate action. Although it is not possible to ‘define‘ these cases – each case must be considered on its merits – it is likely that the evidence would have come eg from social services, a LA or police adult protection team.
Finally, you should consider whether you need to alert others to the abuse. By ‘others’ we mean LA Adult Services, the OPG or the police. Not all revocations will warrant such referral but at the forefront of your thinking must be the necessity to prevent the appointee having the opportunity to commit acts of further abuse. It is not possible to provide a definitive list but the type of case which is likely to warrant such action could include: the appointee works in a care environment where he/she has contact with other vulnerable adults; the amount of money is large”.
Formal status – Trusteeship
A trust is a mechanism whereby people decide what to do with their money – (e.g. a benefactor), or someone who owns the money, but wants to put legal distance between it and themselves – for altruistic, tax or other legal reasons (e.g. a Personal Injury damages trust, or a discretionary trust for their own welfare, or a means to put their own money in trust for a child).
That person, calls the settlor, gives the money to the chosen trustees to DECIDE what to do with it, within the confines of the settlor’s wishes, and can only then benefit from its use, as a beneficiary, but not get it back….
The trustees are obliged to act in the beneficiary’s best interests and can be sued if they don’t.
The crucial difference between managing a person’s money as agent, or as attorney or deputy after capacity is lost, and holding it on trust, is ownership of the money. A manager doesn’t get to own the money; a trustee does, albeit only on paper , in a lawful sense, and not beneficially for himself personally.
A trustee acting for an incapacitated person is in an enormously powerful position. He is not regulated, other than by the law of trusts, (which only a litigation friend or the Official Solicitor will be able to use to help the incapacitated beneficiary), and by the criminal law (use of which is in the discretion of the police and the Crown Prosecution Service).
Appointees are forced to act as trustees where the benefits are paid into an account in the appointee’s name, in my view.
‘Nominee’ trustee accounts
When a person acts as ‘a nominee’ for another, they do so in the role of a bare trustee – e.g. a deputy or attorney holding an account for an incapacitated person who has never had a bank account before – or a Parent’s account for a Child – in both cases the nominee is the legal owner of the money, but not the beneficial owner.
Tax on the account is worked out on the basis of the beneficial owner’s tax position, not the nominee’s tax status. The trusteeship binds the trustee nominee to act in a fiduciary best interests manner. Wrongdoing is a breach of trust.
An attorney or a deputy, with the status of a statutory agent – would not be a trustee or a nominee of an account that had once belonged to the person him or herself but what happens in practice in another matter altogether. The statutory agent would not then be the legal owner of the money; the incapacitated person still would own it.
It is unclear what capacity Appointees hold the money in, if the benefits account is actually in their name, as it now will be in most cases. The best assumption is that the appointee holds the money on trust, though, as above.
Being a Trustee is different to being a signatory, which means one is trusted to operate, by the account holder and owner, as opposed to being a trustee of an account that the person can expect the benefit of, but not own the contents, of the account.
In the past, care homes were often expected to supply so called ‘nominees’ or second ‘signatories’ to operate accounts where the home had no legal authority to manage as statutory agent, and were not administering a trust and where the account holder did not have capacity. This needs to be sorted out, sector wide, because it puts these homes and their staff in an impossible situation of conflict regarding day-to-day spending.
- Gives legal power to manage a person’s money/property or health/welfare – or both
- Gives power to act as a delegate of the Court of Protection
- The order sets out what the Deputy can do generally, and anything else has to be authorised by the Court
- The Deputy’s power, unlike those of the old form of authority, receivership, is in exact correlation to the client’s incapacity,
- so the Deputy does not take over everything – but only things in respect of which the person positively lacks capacity.
- The old form of a ‘Short Order’ is now known as Type III supervision, but they cost the same as Type I to apply for at the outset! Unless the client is on benefits, that is.
- It takes a while to get, and you need evidence of mental incapacity to manage the property or money in question, from at least a GP.
- In order to get deputyship you need to convince the court that it will be necessary.
Deputyship – What’s Involved?
A Deputy is treated as an agent of the individual in relation to anything done or decided by them, and can be paid his reasonable expenses in discharging his functions, out of the individual’s property – section 19(7)(a) MCA.
If the Court directs, deputies can also receive remuneration from the individual’s property for discharging their functions – section 19(7) (b). This is a service, therefore, that can be charged for by anyone who wants to offer it – it is an opportunity for innovative service development, apart from the difficult conflict that providers experience between their business and owing the individual clients in it, a duty, individually through deputyship.
Councils tend to take on deputyship when it enables them to pay fees due, from the person to the council, for care home care, or other such debts. It can also be taken as a means of adult protection, as it will trump some other forms of control.
Who can be a deputy?
- Anyone over 18 – no specific restriction on bankrupts
- Also, a holder for the time being of a specified office – i.e. the director of social services, or the head of adult protection / co-ordinator, maybe.
- Joint or several deputies can be appointed, as the court thinks fit.
- A deputy is treated as the agent of the person in relation to anything done or decided by him or her.
- Deputies can be made to report to the Public Guardian whenever told to do so.
- The deputy’s powers do not extend to any area where the deputy reasonably believes that the person is still capacitated – so its existence is not a means, automatically, to invalidate disadvantageous shopping sprees by disinhibited people.
- Schedule 2 of the MCA supplements the rules in s18 about the powers of the court and deputies.
- The Court decides who will be a Deputy. A Deputy needs to consent to the appointment before it can be made.
- Two or more Deputies can be appointed. They may be appointed to work together or be given different roles by allowing one particular Deputy to make particular decisions.
- Any willing family member or a friend of the person who lacks capacity can apply to be a Deputy. The Court will decide whether the applicant is suitable and has the skills required for the specific tasks they are required to carry out.
- A professional Deputy, such as a Solicitor, from a Panel that the Court has organised, can be appointed if there is no other suitable or willing person to act or where the family members or friends agree it is more appropriate, for example to appoint someone neutral.
What deputies can not do – s20 Mental Capacity Act
- Settle property on trust, or execute wills – not even if the deputy is a finance deputy.
- Exercise any power of consent on behalf of the person – it is unclear what this means exactly – probably related to consent in Trusts, but it does not now matter, in relation to Direct Payments, because of the introduction of the Suitable Person regime (see later).
- Override a decision within the scope of the authority of a donee of an LPA – so there is a hierarchy based on how the person was chosen to be the surrogate in the first place, and a deputy does not trump an attorney, until the attorney is formally displaced by the Court of Protection.
- Refuse consent to a life-sustaining healthcare intervention – not even if they are a personal welfare deputy.
Current Deputyship fees
- £400.00 for the application unless the person in respect of whom the application is made is on benefits.
- £100.00 – A one-off payment for placing the Deputy’s details on a register and carrying out a risk assessment to determine the appropriate Deputy supervision regime.
- Deputy supervision fees – there are four different types of supervision and each attracts a different annual fee which is payable annually in arrears on 31 March.
£800 p.a. – Type I (highest)
£350 p.a. – Type IIA (intermediate)
£175 p.a. – Type II (lower)
£ 0 p.a. – Type III (minimal) – but this is changing to £35 a year, unless the incapacitated person is on benefits.
Applying to the Court for a Deputyship Application
You generally do not need permission for appointments regarding financial matters. You will need permission from the Court if the appointment relates to health and personal welfare decisions. You do need permission to apply to the Court concerning Wills, gifts and Trustees.
You will need to determine which application pack you will need to use. There are 10 different application packs depending on what your application relates to.
You need to arrange for a registered medical practitioner, psychologist or psychiatrist to complete form COP3 – Assessment of Capacity. It is possible that the practitioner will charge a fee for this, which you can later recoup from the funds of the person who lacks capacity. Some people are finding that a psychologist or social worker’s view is enough.
Once you have got the Assessment of Capacity form back you will need to send the application in duplicate (and retain a copy for yourself) to the Office of the Public Guardian with the application fee of £400 unless you qualify for the fee exemption or reduction. If so, then you must fill in Form COP44A.
The Court will then issue your application and within the required time limits you must serve notice on the named Respondents, and notify relatives and any other named persons by way of Form COP15 and send Form COP5to each person to complete. You must also notify the person to whom the application relates personally and attempt to explain the application you are making. Once you have notified each person you must then complete and send to the Court Form COP20(Certificate of Service) for each person served.
Depending on the type of application you have made and whether there are any objections the Court will decide to make a decision without a hearing, give directions and the next steps to be taken, confirm a date for hearing of your application. When the outcome is determined from one of the above the Court will send you official copies of the Order. You must inform the person to whom the Order relates by way of Form COP14 and then you must complete and return Form COP20 (Certificate of Service) to the Court within the time limits.
Factors relevant to the setting of security (for which a bond is bought at an annual cost)
(1) The value and vulnerability of the assets which are under the control of the deputy.
(2) How long it might be before a default or loss is discovered.
(3) The availability and extent of any other remedy or resource available to P in the event of a default or loss.
(4) P’s immediate needs in the event of a default or loss.
(5) The cost to P of ordering security, and the possibilities and cost of increasing his protection in any other way
(6) The gravity of the consequences of loss or default for P, in his circumstances
(7) The status, experience and record of the particular deputy.
Power of Attorney
The individual chooses someone to act as if they were the person him or herself, in the future, at a point when they think it is unlikely that they will always have capacity. The individual chosen to act in this way, can start straight away, as soon as the power of attorney is registered, unless the appointer says not to start unless or until some other check has been made. So the attorney can be operating an account whilst someone still has capacity.
There is no time limit for registering the Power, after it has been given, which can mean that mistakes made at the time of granting the power are not caught, and it may be too late for the person to still have the capacity to put it right. You have to read through it to know whether the person is claiming to do something that they’ve actually been given authority to do, because there may have been conditions imposed on that power which have not yet been met.
Registration is proved by perforation of the forms by the Public Guardian’s Office, not a stamp. The attorney owes a fiduciary duty to the donor. Only the Court can boot out an attorney from their role.
As with deputyship, the person chosen is the statutory agent for the individual even after capacity is lost. The authority to manage finances as an ordinary agent, whilst the owner is still capacitated, survives the later incapacity of the donor – that’s why it’s called a Lasting Power.
Registration is absolutely necessary for validity, but has nothing to do with the timing of the person’s mental deterioration or incapacity any longer (unlike for EPAs under the old law).
It can be expensive unless one is confident about understanding the notes – again, here is another really innovative service development opportunity – helping people to do this without going to a lawyer. It is a position of trust, for the purposes of the Fraud Act and other applicable criminal offences.
Duties of LPAs – what councils will ‘engage’ with them over, when investigating potential abuse:
Attorneys will automatically owe specific duties (as opposed to discretionary duties) to the individuals they act for, which are laid down in the Code of Practice as follows:
- A duty to act where necessary, and take decisions on behalf of the individual who lacks mental capacity to make those decisions him or herself;
- A duty to have due regard to the Code of Practice; A duty to act lawfully as an agent;
- A duty to act within the scope of the authority granted by the Court; A duty to act with care and skill;
- A duty to discharge a fiduciary duty;
- A duty not to delegate the authority given, to anyone else; A duty of good faith;
- A duty of confidentiality;
- A duty to comply with the Court of Protection; A duty to keep accounts; and
- A duty to keep the individual’s money and property, separate from other monies.
Failure to adhere to these duties may end up in an Attorney having to answer to a Local Authority safeguarding/adult abuse investigation, a Judge at the Court of Protection, or the Police.
Signs that an attorney (or anyone else in a position of trust) may be exploiting the donor / owner – 7.70 Mental Capacity Act Code of Practice: the signs include:
- stopping relatives or friends contacting the donor – for example, the attorney may prevent contact or the donor may suddenly refuse visits or telephone calls from family and friends for no reason
- sudden unexplained changes in living arrangements (for example, someone moves in to care for a donor they’ve had little contact with)
- not allowing healthcare or social care staff to see the donor
- taking the donor out of hospital against medical advice, while the donor is having necessary medical treatment
- unpaid bills (for example, residential care or nursing home fees)
- an attorney opening a credit card account for the donor
- spending money on things that are not obviously related to the donor’s needs
- the attorney spending money in an unusual or extravagant way
- transferring financial assets to another country.
Fees for registering an LPA
A fee of £120 is charged for registration of each Lasting Power of Attorney application. If your gross annual income is less than £16,500 you may qualify for a fee exemption or remission. A separate registration fee is payable for Property and Affairs LPAs and Personal Welfare LPAs when each application for registration is made. No refund is available should either donor or attorney die before registration is complete. No refund is available should the application be invalid or imperfect. For £25 you can get a search done of the three OPG registers: the register of registered LPAs, registered EPAs and the register of Court orders appointing Deputies.
Creating an LPA….
Section 10 and Schedule 1 of the Mental Capacity Act lay down the formalities for creating an LPA.
These provide amongst other things that the LPA must include a certificate completed by an independent third party, confirming that in their opinion the individual understands the purpose of the LPA and that neither fraud or undue pressure has been used to persuade them to enter into making an LPA.
There are rules as to who can be a certificate provider, which divide up into those who’ve known the person for a long time, and those who have special skills for making such judgements.
There are also rules about people who cannot be a certificate provider and the most important one is it can’t be the same person who is being given the power of attorney, and it can’t be a family member or someone at the care home where the person is living.
Persons who may give a certificate relating to an LPA
Persons who may provide an LPA certificate
- — (1) Subject to paragraph (3), the following persons may give an LPA certificate –
(a) a person chosen by the donor as being someone who has known him personally for the period of at least two years which ends immediately before the date on which that person signs the LPA certificate;
(b) a person chosen by the donor who, on account of his professional skills and expertise, reasonably considers that he is competent to make the judgments necessary to certify the matters set out in paragraph (2)(1)(e)of Schedule 1 to the Act.
(2) The following are examples of persons within paragraph (1)(b)—
(a) a registered health care professional;
(b) a barrister, solicitor or advocate called or admitted in any part of the United Kingdom;
(c) a registered social worker; or
(d) an independent mental capacity advocate.
Persons who are disqualified from giving a certificate
(3) A person is disqualified from giving an LPA certificate in respect of any instrument intended to create a lasting power of attorney if that person is—
(a) a family member of the donor (n.b. this is not defined but common sense applies);
(b) a donee of that power;
(c) a donee of—
(i) any other lasting power of attorney, or
(ii) an enduring power of attorney, which has been executed by the donor (whether or not it has been revoked);
(d) a family member of a donee within sub-paragraph (b);
(e) a director or employee of a trust corporation acting as a donee within sub- paragraph (b);
(f) a business partner or employee of—
(i) the donor, or
(ii) a donee within sub-paragraph (b);
(g) an owner, director, manager or employee of any care home in which the donor is living when the instrument is executed; or
(h) a family member of a person within sub-paragraph (g)
The role of a certificating person
What are my responsibilities as Certificate Provider?
You will need to talk to the Donor about LPAs generally, and about the contents of his or her LPA in a place where they feel able to speak or communicate with you freely.
You will need to talk to the Donor in private and away from his or her Attorney(s) and you will need to confirm in the Certificate that you have done so. The Certificate is not valid if the Attorney is present when you discuss the LPA with the Donor.
There may be circumstances where someone else needs to be present with the Donor when you discuss the LPA with him or her. For example, if the Donor is deaf and you need someone to translate sign language for you. You should state on the Certificate if someone else was present and why. This person must never be the Attorney(s).
You will need to assess the Donor’s capacity to understand what an LPA is, the importance of the LPA and the effect of the powers he or she is giving in the LPA.
If you are content, you should sign the Certificate straight after discussing the LPA with the Donor. This is because you are certifying that, at the time when you sign the Certificate, you are of the opinion that the Donor has the capacity to make the LPA.
Taking on the role of Certificate Provider is very important as it provides one of the main safeguards in the LPA process.
It is important to remember that, if anyone decides to object to the LPA at the point when it is being registered, you as Certificate Provider may be required to explain the reasons why in your opinion the Donor had the capacity to create the power and was not acting under pressure. You may be required to explain this to the Court of Protection.
Understanding mental capacity
A formal test of mental capacity is not necessary in order to provide a Certificate. However, it is important that you are satisfied that, in your opinion, the Donor understands the LPA they are making, has the mental capacity to make it and that they are not being forced into making it.
It is important that you think about the questions you will need to ask the Donor to establish their capacity and understanding. You may want to consider asking the Donor the following open questions to help you establish if they:
- Understand the LPA and the powers they are giving:
- What is an LPA?
- Why do you want to make an LPA?
- Who are you appointing as your Attorney?
- Why have you chosen to appoint x as your Attorney?
- What powers are you giving your Attorney(s)
- Have been put under pressure to make the LPA:
- Has the Attorney given you the answers to certain questions (like those listed above)?
- Do you have any reason to believe that the Attorney is not trustworthy?
- Are aware of any other reasons why the LPA should not be created.
You will also need to ask questions that are specific to the person and the LPA in front of you. You may want to prepare a checklist to help you with this. You may want to keep a record of the questions you asked and the responses the Donor gave, on a separate sheet for your own records.
Objection to registration direct to Court by a third party: LPA Regs
(1) This regulation deals with any objection to the registration of an instrument as a lasting power of attorney which is to be made to the court.
(2) The grounds for making an application to the court are—
(a) that one or more of the requirements for the creation of a lasting power of attorney have not been met;
(b) that the power has been revoked, or has otherwise come to an end, on a ground other than the grounds set out in paragraph 13(1) of Schedule 1 to the Act;
(c) any of the grounds set out in paragraph (a) or (b) of section 22 (3) of the Act. (Fraud etc)
Self-revocation of an LPA – helping a still-capacitated person to help themselves
Revocation by donor of lasting power of attorney under the LPA Regs
Regulation 21. —
A donor who revokes a lasting power of attorney must—
(a) notify the Public Guardian that he has done so; and
(b) notify the donee (or, if more than one, each of them) of the revocation.
(2) Where the Public Guardian receives a notice under paragraph (1)(a), he must cancel the registration of the instrument creating the power if he is satisfied that the donor has taken such steps as are necessary in law to revoke it.
(3) The Public Guardian may require the donor to provide such further information, or produce such documents, as the Public Guardian reasonably considers necessary to enable him to determine whether the steps necessary for revocation have been taken.
(4) Where the Public Guardian cancels the registration of the instrument he must notify—
(a) the donor; and
(b) the donee or, if more than one, each of them.
But is it valid after revocation but before cancellation?
Legal advice of a formal nature needs to be taken concerning this question; logic and general principles suggest that it could be valid, unless the third party dealing with your attorney knew or had reason to know of your revocation.
Charging for these roles
- You can only charge for informal or formal agency, if it’s agreed between the owner of the money and the agent
- Holding a power of attorney – you can only charge for these services if agreed between the donor and the donee at the time
- Deputyship – only if services are rendered as a professional and the court says yes
- Appointee – there is no provision for payment by the beneficiary at all, for the service
- Trustee – a trustee may not benefit from his or her trust apart from limited exceptions – one being if the rules of the trust specifically allow – so again, there can be a charge if the settlor – not the beneficiary – allows…
- Support to a residually capacitated person with money management – a contracted service – whatever is agreed by the purchaser – this might be the council, might be the client, but if it’s in a care package, it will be a charged for service to the client…under Fairer Charging, eventually.
- Brokerage, purchasing agent, payment or payroll services – yes they can charge, if it’s agreed.
NB however – the current position is that IF you charge for some of these services to a person who is known to you, you lose exemptions from registration and from duties in relation to letting barred workers work in a social care role, and exposure to barring for one’s own self.
Informal mnagement of money, in an era of personalisation….
The Mental Capacity Act 2005 gave anyone involved with incapacitated people legal protection from civil or criminal liability, if they do things for such a person, on a best interests basis. But that legal protection only extends to handling a person’s cash, not their bank accounts or their property.
Providers are being asked to manage lots of people’s money through ‘ISFs’, as part of the answer to why direct payments have never yet become the mainstream choice – ie, the hassle factor.
Families are being expected to provide more support to keep people at home for longer; and staying at home means coping with money – paying bills, and managing income by way of pensions, benefits, direct payments, etc. So, family members and carers are often doing that sort of help as well as well as online banking, etc.
Squaring the circle, providers are now being asked to contract directly with clients having direct payments, and where capacity is lacking, to contract with their Suitable Persons, the formally appointed managers of their direct payments.
So knowing about money management and understanding the difference it makes if the helped person is incapacitated, is becoming part and parcel of being a carer or a provider.
And remember – re getting lawful access to a person’s assets – from the Mental Capacity Act Code of Practice, it is clear that you can’t just crack on…
6.64 Anyone wanting access to money in a person’s bank or building society will need formal legal authority. They will also need legal authority to sell a person’s property. Such authority could be given in a Lasting Power of Attorney (LPA) appointing an attorney to deal with property and affairs, or in an order of the Court of Protection.
6.65 Sometimes another person will already have legal control of the finances and property of a person who lacks capacity to manage their own affairs. This could be an attorney acting under a registered EPA or an appropriate LPA or a deputy appointed by the Court of Protection. Or it could be someone (usually a carer) that has the right to act as an ‘appointee’ (under Social Security Regulations) and claim benefits for a person who lacks capacity to make their own claim and use the money on the person’s behalf. But an appointee cannot deal with other assets or savings from sources other than benefits.
Joint Bank Accounts
When two people take out a joint bank account with a bank or building society, each person – each with mental capacity to have made the banking contract with the bank in the first place – owns the full amount in legal terms, regardless of who put the money in, so either person can draw on or even empty the account.
For charging purposes etc., one half is owned by each, regardless of who put the money in. When one person loses capacity, the banks believe it is the law that they must freeze the account, because the person’s capacity to withdraw consent to the other’s actions on the account, has gone. But how does the bank ever get to find out?
Additional signatory status is not the same thing; that’s simply having a right to operate the other person’s account, and requires a mentally capacitated ‘3rd party’ mandate to be given to the bank. It cannot continue past loss of capacity. Again though, who would know?
A joint bank account is not the same as an account opened for the benefit of two people one of whom does not have capacity to have an account. But it used to be done all the time. These days, the money laundering rules compel bank managers to actually see the people opening the account and get both their signatures if it is a joint one.
Informal means of managing people’s money, without proper authority
Giving someone a filled out cheque and asking them to sign it, is usually ‘helping’ them continue to manage, even if they can’t work out quite what the money is for, or whether it is the right amount.
Using a person’s card, with knowledge of their PIN and their consent, works like this too. It’s called informal agency.
It is a dangerous practice for the whole system to revolve around, though, because at some point, capacity will deteriorate, the authority will evaporate, and no-one will know, but in reality, the world would grind to a halt without people getting this sort of help.
In legal terms, the disclosure of the PIN, without notification to the bank, puts the holder in breach of the agreement with the card holder, and renders the fraud guarantee obsolete.
Giving someone else your PIN number or banking password
IF there are ways of using someone’s card, which are above board, i.e. with the knowledge and support of the financial institution, there’s nothing wrong with that. But this can only lawfully be done if the person owning the money has at least minimal capacity to make the person their helper in the first place.
There are some banks who will provide a person with two cards, one for him, or her, and one for the other operator of the account, so that records may be checked for who is removing the money each time. The helper is then like a second signatory on the sole account, operating it with the consent of the account holder, and bound by the agreement between him/her and the money owner. But the helper is still bound to give up the power when he/she knows that the person has deteriorated beyond consenting to the help in this way.
Obtaining goods and services for incapacitated people properly, but without formal status
Section 7 Mental Capacity Act imposed an enforceable but non- contractual obligation directly on incapacitated people to pay a reasonable amount for ‘necessaries’ supplied – i.e. goods and services that one could not do without.
The history of this concept suggests a fairly generous definition would be applied as to what is a necessity and what is not – it’s not a strict definition. It doesn’t make it any easier for the poor provider to get money from a person with a disability, however. You need them to have a Litigation Friend to stand in their shoes for running the court case. And it doesn’t appear to cover housing, because accommodation is neither goods nor services.
There is a common law obligation, however, on anyone occupying someone’s property, to pay a reasonable amount for the usage. So, incapacitated people do not really need written tenancies, to live in the community in a normalised way. They still have a liability to pay, under common law, so they can get Housing Benefit, and they qualify for protection from eviction without due notice, as residential occupiers…
But landlords quite legitimately want tenants bound by terms and conditions just like anyone else, and we all want security of tenure, for the tenants…
Wychavon v EM – 2011 – a case on HB and tenancies – really important for people who could afford to live independently, if only they could get housing benefit to pay their rent.
A 20 year old severely learning disabled woman lived in a house bought on mortgage by her parents; they charged her rent (about £700 a month) based on a tenancy between her father the landlord, and her, as the tenant. The agreement was not signed; instead a sentence had been written explaining that she could not understand or sign the agreement.
The agreement was made in 2009 and the mother acquired deputyship in 2010. There was no agreement; there was no liability to pay rent. The tribunal had held that the parents could bind the daughter, subject only to the contract being voidable.
The appeal tribunal agreed that the absence of a signature is not fatal IF and only if there is an agreement underlying the deal. The appeal tribunal agreed that the question turned on the lawful authority of the parents to bind the daughter, and the decision-maker reviewed the law and set the first level tribunal right! There was no authority in this case; there could not be. The father had honestly asserted that his daughter could NOT have understood the tenancy agreement, not even in essence, so there was NO evidence of anything even approximating to informed consensus.
English law holds that even if there is an appearance of a contract, it is void, and not merely voidable, if it must have been known to the other party that the person lacked capacity to agree the essentials of the deal. There was no authority to bind the daughter on the part of the parents. The decision-maker said that the same would be the case if it had been a licence; you need capacity to agree to one of those too.
Of more help though, was the view on the propriety of the arrangement, if only the deputyship had been signed: it was commercially necessary, not a contrivance, and had been carefully discussed with the LA, and had it not been for the capacity point, it would have been ok to claim HB.
This case has since been developed further, with the judge – Judge Mark, accepting that he had overlooked the fact that anyone, whether capacitated or not, is still liable to pay a reasonable fee at common law, under the law of necessaries, for whatever is supplied to a person not able to contract for it, so long as it IS necessary. So this clarification has made it possible to say legitimately to HB officers that even if there is no tenancy, there is still an enforceable liability to pay for the occupation of the premises. Hooray for law!
Informal but perfectly proper Care and Support arrangements, made by others
Incapacitated people can also get the benefit of things or services – anything to do with care or support – without even trying to contract for them, if someone else – anyone – pledges the incapacitated person’s credit having done the thinking required in the Mental Capacity Act – (i.e. is the arrangement in the person’s best interests?)
This means the other person promises – without anyone entering into any kind of contract with anyone else – promises that the service user will pay, if the provider will be kind enough to provide the goods or services. You do not have to be a person’s Suitable Person to have this right – all you need is lawful access to the person’s cash.
Some councils have thought this would work through a pre-paid card, where the helper accesses the cash ‘of the client’ from a special council bank account. But the money would still have to belong to the client, for this to work, and incapacitated clients can’t say yes to a direct payment, without a Suitable Person consenting for them… So this is a non-starter, in my opinion.
So one way of doing this with a bit more formality is to be appointed Suitable Person, and then use the person’s direct payment to pay. A Suitable Person can use this method if he or she does not want personal liability to the provider – if the provider is willing to trust the SP. But the absence of any binding legal contract – not even an oral one – means the absence of rights, standards, regulations etc. – and no way to make other terms which would normally matter to everyone, into binding terms. That’s probably why Suitable Person status has been invented, because providers, would not, generally, be happy to put their business’ cash flow on the line in this way.
Summary of disadvantages of ‘fudging’ legal rights in this area:
- When you intervene, you are doing so without legal authority.
- Your authority arose out of consent, but ended when capacity to remember the arrangement or understanding or the power to communicate wanting it to stop, ceased, however benign, your intention.
- You have no protection under the Mental Capacity Act.
- You cannot pass legal title to anything you have sold
- You hold any money you made on trust for the person concerned, or for their estate
- You are personally liable for anything you contracted for
- You may be full employer of anyone you employed, and uninsured as the employer, which is a criminal offence.