Capacity, Deputyship and The Court of Protection
The Legal Framework
The Mental Capacity Act 2005
The provisions of the Act came into force in 2007 and replaced the previous powers under the Mental Health Act. The Act is designed to protect vulnerable people who may not be capable of making all their own decisions. It makes it clear that, when someone is being assessed in respect of their capacity to make a specific decision, that person must be given the appropriate level of assistance to enable them to make that decision themselves. The Act sets out who can make decisions in specific situations and the principles that must be followed when doing so. The legislation is implemented by the Court of Protection and supported by the Code of Practice which provides guidance to anyone who works with or cares for people who may lack capacity to make particular decisions.
The Court of Protection (CoP)
The COP is a specialist court which deals with decision making for people who do not have capacity to make decisions themselves. It is a separate branch of the High Court from the court which is dealing with any litigation claim. The COP can appoint a deputy to make decisions on behalf of someone who lacks capacity.
The Office of the Public Guardian (OPG)
The OPG is the administrative arm of the COP. It supervises court-appointed deputies, keeps registers of deputies and investigates complaints against a deputy.
What is a deputy?
A deputy is appointed by an order of the COP. A deputy will be given ongoing legal authority to make decisions on behalf of an individual who lacks capacity to make particular decisions. A deputy can be appointed for ‘property and finances’ or ‘health and welfare’ decisions or both. It is much less common for the court to appoint a deputy to make health and welfare decisions. The court prefers to make these decisions itself on a case-by-case basis. A property and finances deputy will be appointed to look after a person’s financial affairs if the individual is deemed incapable of making decisions about their financial matters themselves.
What is meant by ‘lack of capacity’?
A person’s capacity refers specifically to their ability to make a particular decision at the time it needs to be made. Capacity is an issue-specific matter. This means that if someone is unable to make a decision in respect of one matter, it does not necessarily follow that they are unable to make all decisions in respect of all their financial affairs. Before a deputy can be appointed, the COP has to be satisfied that the person lacks the relevant capacity to make a specific decision for him or herself. This will need to be determined by medical evidence.
Options for children with legal claims
If your child is going to receive a compensation award for personal injury it is often very difficult to determine whether a young child will have capacity to manage their finances when they reach 18. Typically, as part of the litigation process, a medical professional will be asked to comment on the likelihood of your child having capacity. There are three main scenarios:
1. Your child is likely to have capacity at age 18. If a medical professional believes that your child is likely to have capacity at 18, then the COP does NOT have the authority to appoint a deputy. There are two options available for the payment and use of your child’s compensation award: a) to pay the money into the court dealing with the litigation; or b) to set up a trust so that the money can be withdrawn from the court. The trust would have to be approved by the court dealing with the litigation claim. Assuming that your child is then judged as having capacity when he or she reaches 18, they would then be absolutely entitled to the money.
2. Your child is not likely to have capacity at age 18 If a medical professional considers that it is unlikely that your child will have capacity to manage his or her finances at 18, then the COP has the power to make financial decisions on your child’s behalf. The COP has two options available: a) to appoint a deputy; or b) to approve a trust. Although it is within the COP’s powers to set up a trust for a child who is unlikely to have capacity at 18, the default position is that an application should be made for the appointment of a deputy. To persuade the COP to approve a trust instead of appointing a deputy, it would be necessary to provide reasons why a trust would be more appropriate for your child.
3. It is unclear whether your child will have capacity This is a slightly grey area. Sometimes it happens that, in the early stages of litigation, it is considered that a child is likely to have capacity on reaching 18. In these circumstances, a trust would usually be approved by the court dealing with the litigation. As the litigation progresses, more evidence may be gathered which indicates that your child is not likely to have capacity on reaching 18. In these circumstances, it would be appropriate for an application to be made to the COP to convert the trust to a deputyship.
The role of the deputy
The appointment of a deputy ensures that your relative retains financial independence while having someone to step in and make decisions in their best interests if necessary. It is our aim to work closely with you to find the level of financial independence that is suitable for your relative. In many cases, these concerns are being voiced by the parents of a young child who is unlikely to have capacity on becoming an adult, where involvement in decision making will have greater significance.
The role of the deputy can be challenging and time-consuming, particularly where the funds to be managed are substantial. One advantage of having a professional deputy is that this professional will be familiar with the requirements for running the deputyship. They will also have the knowledge and expertise for instructing case managers, managing awards for claimants and setting up care regimes.
Once the deputyship order has been made, the deputy is authorised to deal with all aspects of the person’s finances including collecting in benefits, managing bank accounts and dealing with day-to-day expenditure. Depending on the scope of the deputyship order, the purchase of larger items such as a property may require further authority from the COP.
A financial budget is often required by the COP as part of the application process. The budget is very important both at the outset and on-going, particularly where a person has received an award for personal injury. It is very important for the deputy to plan the income and expenditure and investment of the funds, so that your relative’s long-term future is secure. Although the COP may ask to see a budget of day-to-day expenses, it does not oversee the management of that budget.
Appointing a deputy
Who can be appointed a deputy?
A deputy must be over 18 years old. A deputy would often be a friend or relative of the person who needs help to make their decisions. It may be considered appropriate for a professional such as a solicitor to be appointed, particularly if complex decisions need to be made or there are likely to be large sums of money to manage. If a legal claim is being made, then the cost of a professional deputy can usually be claimed as part of the compensation.
When should a deputy be appointed?
The appointment of a deputy will not be considered until a medical expert has expressed his/her opinion as follows:
• Where the claimant in the litigation is an adult – that the claimant does not have capacity to manage his/her financial affairs.
• Where the claimant is a child (under 18) – that the claimant is unlikely to have capacity at age 18.
The application to appoint a professional deputy is usually made when it is felt that the claimant and their family would benefit from the assistance of a professional deputy. This may be on receipt of an interim payment or following the final settlement of a claim. The process may also be initiated once a defendant has admitted liability so that the deputy is in place to manage any interim payments received.
Will the deputy make all the decisions for your relative?
The appointment of a property and finances deputy does not mean that the deputy will make all financial decisions for your relative. The Code of Practice states that a deputy has a duty to consult. A deputy must only make a decision if your relative cannot make it for themselves. For example, your relative may not be able to manage a large award following a litigation claim or understand the consequence of investments but they may be able to manage small amounts of money on their own. It is therefore important that the deputy consults and gives your relative the opportunity to make decisions on specific matters if appropriate. One of the key principles in the Act is that any decision made on behalf of someone who lacks capacity must be in his or her best interests. The Act makes it clear that, when someone is being assessed in respect of their capacity to make a specific decision, they must be given the appropriate level of assistance to enable them to make that decision themselves.
What happens if your relative recovers some capacity?
Part of the process of capacity assessments requires that a person’s capacity should be reviewed often to establish not only if they have recovered capacity to make their own decisions but also to observe their rights to liberty and to give them an opportunity to make decisions for themselves where possible. If it is thought that someone has regained sufficient capacity to make all their own financial decisions (and if there is medical evidence to support this) then an application could be made to the COP to discharge the deputy.
How long will the appointment of the deputy last?
The COP may restrict the length of time a particular appointment will last. An example of where the court may do this is where a deputy is appointed for a child. Sometimes the court will include a limitation in the order so that the child has to be reassessed on reaching 18.
What are the main day-to-day tasks of a deputy?
The deputy will manage a wide range of financial affairs including routine matters such as:
• the management of the deputyship bank account
• setting up new standing orders
• altering existing standing orders and direct debits
• monitoring statements
• settling invoices
• dealing with monthly allowances
Additionally, a Deputy may have some less routine tasks such as:
• Liaising with financial advisors and relatives to consider your relative’s long term financial needs, arranging the investment of funds and then dealing with reviews and valuations of any investments.
• Setting up bank accounts, payment of routine bills, budgeting and general financial management and monitoring of cash flow.
• The purchase of a home for your relative and/or organising alterations and adaptations.
• Approving the set-up of a care regime and, where the care regime is not managed by a third party, arranging contracts of employment, payment of tax and payroll services together with on-going monitoring once a care regime is in place.
• Completing an income and capital gains tax return and dealing with HM Revenue & Customs.
Frequently asked questions
hat is the difference between a case manager and a deputy and will my relative need both?
For someone who cannot manage their property and financial affairs, a deputy is necessary. Having a case manager is a choice. Where it is considered appropriate to have a case manager, the deputy would be responsible for appointing the case manager and would work closely with them on an on-going basis. The case manager would be involved in the co-ordination of rehabilitation, care and support regimes including sourcing therapies and carers. It is the deputy who has legal authority to enter into legally binding contracts – such as directly employing acareron behalf of your relative. The case manager would not be directly involved in financial decisions and financial management issues would be confidential to the deputy. The deputy is the ‘budget holder’. The case manager would be accountable to the deputy who would ultimately oversee any plan implemented by the case manager and monitor the financial implications. Court of Protection case managers are different from case managers in this context. A COP case manager is part of the deputyship team and assists the deputy with day-to-day issues which arise on the deputyship file.
Will I be included in decisions?
It is the duty of the deputy to consult with family, friends and any other individuals closely involved in your relative’s life.
Can my relative still have his/her own bank account? Yes, if it is considered that the individual has capacity to operate his or her own bank account. Under the Mental Capacity Act 2005, capacity is ‘issue-specific’. This means that, although someone may not have capacity to manage their compensation award, they could still have capacity to operate a small bank account.
What happens if my relative regains capacity? If your relative improves enough to make their own decisions, you can apply to the COP to discharge the deputy on the basis that a deputy is no longer necessary.
In what circumstances do a deputy’s duties cease? A deputy can be appointed to manage someone’s affairs during his/her whole lifetime or can be substituted if required. The appointment of a deputy and their duties cease if the following occurs:
• where your relative ceases to lack capacity;
• if the court appoints a new deputy;
• on death of the deputy
• if the deputy is declared bankrupt.
About this guide
This guide is a general guide to Capacity, Deputyship and the Court of Protection. We are extremely grateful to Julie Burton and the Court of Protection team at PenningtonsManches LLP for their input. However, this is a guide only. It is not a substitute for professional legal advice no reliance should be placed upon this guide as legal advice. We recommend that you speak to a suitably qualified legal professional as circumstances can vary and the consequential legal steps required will be different from case to case.