When a person loses capacity to look after their UK situated assets, usually someone has to assume responsibility for their management. The well advised have often made an Enduring Power of Attorney, or nowadays, a Lasting Power of Attorney naming someone they trust to act as their attorney. For everyone else, there’s the Court of Protection, which will name whomever the judge deems most appropriate to deal with the assets (known as the deputy).
Given how common losing capacity is in our long-lived population these days, it’s surprising that it’s taken this long for a few cases to come along to clarify how attorneys and deputies should invest an incapable person’s (the donor’s) assets and the parameters of acceptable gifts that can be made. However, like the proverbial London buses, indeed they have come together this summer, in the guise of Re Buckley, Re GM and In the matter of Joan Treadwell.
So, if you are an attorney or deputy yourself, or advising those who are, here are some headlines from those cases:
· Attorneys have fiduciary duties and cannot do whatever they like with the donor’s funds, even if their plans would have met with the donor’s approval.
· The investment must be in the donor’s best interests and be done in the donor’s name wherever possible.
· When it comes to investment, attorneys and deputies should think like trustees. That means getting familiar with the standard investment criteria in the Trustee Act 2000, keeping matters under regular review and taking advice from someone suitably qualified and FSA regulated.
· Familiarise yourself with ‘Investing for Patients’ (an in-house investment guide used by the Court) – see Re Buckley for details.
Transactions with the donor’s money:
· The Court must usually approve:
o gifts in excess of the very limited scope of authority given to attorneys and deputies (although gifts of the IHT £3,000 annual exemption and £250 per person small gifts exemption may be acceptable if the circumstances outlined in Re GM are met);
o loans to the attorney or his family;
o investment into the attorney’s business;
o sales or purchases at an undervalue; and
o transactions where the donor’s and attorney’s interests conflict.
· Attorneys must not take personal advantage of their position.
· Reimbursement for reasonable expenses only is acceptable. Deputy expenses in excess of £500 per annum are likely to be questioned by the Office of the Public Guardian.The Court of Protection judge also extolled the virtues of attorneys and deputies being familiar with the Mental Capacity Act Code of Practice, as they will be judged by reference to it. In fact, that is not bad advice for anyone whose job involves looking after money for donors.