It is estimated that 850,000 people are living with dementia in the UK.1 The population is living longer, but with health concerns that can lead to greater vulnerability in later life.
The existence of the England and Wales Court of Protection (CoP), 2 with its safeguarding and decision-making powers, offers reassurance to vulnerable individuals and those who support them that their best interests are served.
Acting for vulnerable individuals, supporting them with decisionmaking and liaising with the CoP is a varied and specialist area that is underpinned by the broad concept of best interests.
What is in someone’s best interests is decided on a case-by-case basis and there are specific factors that must inform that decision, as set out below.
They involve reflecting on the way in which an individual has behaved in the past; how best to organise and safeguard matters in the years ahead; and consulting with others who share concerns about the vulnerable individual. As case law demonstrates, particularly where we are supporting clients in later life, there is much to draw upon in terms of the ways in which individuals have led their lives prior to the onset of incapacity that informs the decision-making process.
The Mental Capacity Act 2005 (the Act) sets out the legal framework for decisionmaking on behalf of individuals who cannot make decisions themselves. Navigating this process requires us to turn to the CoP to take action on that person’s behalf where the decision in question falls outside the general authority contained in a deputyship order or power of attorney. Acting in an individual’s best interests is a key principle under s.1(5) of the Act and s.4 sets out the factors that must be considered in determining what is in someone’s best interests.
The decision-maker must consider the following as far as possible:
- the person’s past and present wishes and feelings (including any relevant written statement made by them when they had capacity);
- the beliefs and values that would be likely to influence their decision if they had capacity; and
- the other factors that they would be likely to consider if they were able to do so.
Where it is practicable and appropriate to consult with the following, they should also take into account the views of other individuals, such as anyone named by the person as someone to be consulted on the matter in question; anyone engaged in caring for the person or interested in their welfare; or any attorney under an LPA or deputy appointed for that person.
We must also be alive to such issues as financial abuse, to which social isolation can contribute.
For example, when advisors are approached, first contact is often not with the vulnerable person themselves, but with their relatives. Advisors must be sensitive to relationship dynamics and be mindful of any imbalance of power or influence that may be present. In considering these issues from the outset, the person’s best interests are the starting point and remain the guiding principle.
The Act and the best-interests principles apply to all decisions made on behalf of those who lack the capacity to make the decision in question, whether that lack of capacity might be temporary or permanent, and whether it is an attorney acting under a power of attorney for a vulnerable person or a deputy under a deputyship order.
Lasting powers of attorney (LPAs) for financial affairs and for health-related decisions can be created by an individual, the donor, if they have the capacity to do so.
By creating the LPA, they give their attorney the legal authority to make decisions on their behalf if they lose the capacity to make those decisions in the future, or if the donor no longer wants to make decisions themselves.
The role of an attorney comes with wide-ranging responsibilities. The basis, when advising the donor on their choice of attorney, is para.7.8 of the Code of Practice to the Act: ‘A donor should think carefully before choosing someone to be their attorney. An attorney should be someone who is trustworthy, competent and reliable. They should have the skills and ability to carry out the necessary tasks.’
Although, of course, the donor must make their own decision about whom they wish to appoint as attorney, and advice in this respect should be offered sensitively, this highlights the importance of considering at an early stage a potential attorney’s ability to act in and prioritise the best interests of a vulnerable person.
The changes in June 2015 to the prescribed LPA forms and the partial digitalisation of the registration process have led to widespread concerns in the profession that the LPA creation process and the vulnerable donors at its centre are exposed to a greater risk of abuse. Although additional safeguards can be drawn into LPAs, it is the case that they are at greater risk of abuse than a deputyship appointment.
If an individual does not have the capacity to create a financial LPA, an application can be made to the CoP for the appointment of a deputy. In terms of safeguards for a vulnerable client, deputies are monitored far more closely than attorneys. Both a financial attorney and deputy have a duty to maintain proper accounts, keep the donor’s money separate from their own and adhere to their fiduciary duty, so as not to benefit as a result of their appointment.
However, deputies are also subject to supervision by the Office of the Public Guardian and are required to produce annual reports and accounts, and a security bond must be put in place to protect against any loss caused to the client’s estate as a result of a deputy’s actions. These elements offer a more protective framework.
As the Law Society of England and Wales advises in its LPA practice note,3 putting in place a deputyship may be advisable where assets are more substantial or complex than relatives are used to managing, such as where there is a damages award to administer. This was a point highlighted in the case of Re A (2015).
The rules surrounding gifting from a vulnerable person’s assets help to demonstrate the role that the CoP plays in protecting that individual, bringing attorneys and deputies to account where they have exceeded their authority, and giving effect to the client’s wishes. The person’s best interests remain the overarching principle in decision-making.
Under s.12 of the Act, an attorney under an LPA has a limited power to make gifts to individuals associated with the donor on customary occasions, provided the gift is reasonable in terms of its size, and taking account of the circumstances as a whole. If the proposed gift fails to fulfil any of these requirements, an application must be made to the CoP under s.23(2)(b) of the Act for specific authority to make the gift. A deputy’s authority to make gifts is set out in the deputyship order, but is similar in scope.
The importance of a vulnerable client’s own wishes and any pattern of giving that they demonstrated historically was made clear in the case of Re JMA,4 where the attorney sought to receive a gift exceeding GBP7 million from his mother’s estate. Provided that she survived at least three years following the date of the gift, there would be an inheritance tax saving, and this was calculated to be GBP3.2 million if she survived seven years. The gift’s affordability was important, but the individual’s own attitude towards tax planning and gifting during her lifetime was also key. Indeed, there was evidence that P had taken tax advice and sought to manage her estate in a tax-efficient way.
Judge Hilder confirmed in her judgment: ‘[I]t is no part of the Court of Protection’s function to protect either an inheritance or a revenue stream.
Inheritance tax mitigating can in my view only meaningfully be considered in the best interests balancing exercise as a mechanism which either supports or goes against the particular individual’s wishes and feelings, values and beliefs about gifting and tax planning.’ We are therefore reminded that, when considering a client’s best interests, particularly for those who lack capacity in later life, thought must be given to how they chose to manage their affairs themselves; the CoP rather seeks to honour the spirit that the client might have adopted themselves when balancing the various elements of a best-interests decision.
This article originally appeared in STEP Journal. Brian Bacon and Louise Mathias-Williams, ‘Best-interests best practice’, STEP Journal (Vol28 Iss4), pp.80-81