Looking after the finances of an elderly relative as a deputy; what does the Court of Protection do?

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If you don’t have a long term power of attorney in place, and you can’t make decisions about your own finances, a special court will have to appoint someone to be a deputy. The Court of Protection is a court set up to make decisions about people who are unable to make decisions about themselves, perhaps because they have dementia or learning difficulties. Find out what’s involved.

What does the Court of Protection do?

If you don’t haver legal authority to manage someone else’s money and they lose the ability to do this, you have to apply to a special court. It’s called the Court of Protection in England and Wales, the Office of Public Guardian in Scotland and the Office of Care and Protection in Northern Ireland.

This court can:

  • Appoint someone to look after another person’s finances on their behalf. If, for example, you have an elderly relative who is losing the ability to make decisions for themselves (called losing ‘mental capacity’), the Court of Protection can decide who should make financial decisions for them.

SAVVY TIP: If your relative already has a legal document called a ‘power of attorney’, this will give the person(s) named in the document the legal authority to take over their finances. If it’s an ongoing power of attorney, the person can take over their relative’s finances once they are no longer mentally capable of doing so.

  • Set the rules and fees by which the person has to run their elderly relative’s affairs. The person is called a ‘deputy’ in England and Wales, a ‘guardian’ in Scotland and a ‘controller’ in Northern Ireland.

SAVVY TIP: You will have to pay a fee to become a deputy, guardian or controller. You will also have to pay charges because you have to keep accounts and show why you’ve made certain decisions. You can find information about the fees you have to pay when you apply to become a deputy on the Gov.uk website.

When does someone lose mental capacity?

Deciding whether or not your parent/relative has lost mental capacity may not be straightforward. The law assumes that someone has mental capacity (i.e. the ability to make decisions about themselves) unless it can be shown they don’t have it.

SAVVY TIP: Just because someone has made a foolish decision or one that’s not in their interests doesn’t mean they don’t have mental capacity.

As a rough guide, someone has mental capacity if they:

  • Understand the decision they have to make and the information they’ve been given.
  • Can remember the information they’ve been given.
  • Can weigh up the information they’ve been given to reach a decision.
  • Can communicate their decision.

SAVVY TIP: Someone may have the mental capacity to do certain things, but not to do others. For example, they may have the mental capacity to buy a newspaper or magazine but not to buy a house, or they may have the mental capacity to run their day-to-day bank account but not to put money in investments.

What can you do as a deputy, guardian or controller?

As a deputy, guardian or controller, you must always act in the best interests of the person who has lost mental capacity. You can do things such as:

– Pay the day-to-day bills, including care home fees.

– Sell your relative’s home, if, for example, it needs to be sold to pay for care.

– Administer or cash in savings or investments held in his or her name.

SAVVY TIP: You should set up a separate account for the person you’re acting for, into which all income should be paid and all payments made. The only real exception to this is if you’re looking after your husband, wife, civil partner or partner’s financial affairs and you’ve had a joint account for many years.

What can’t you do as a deputy, guardian or controller?

As a deputy, guardian or controller, there are certain things you cannot do, such as:

– Change their will or make a new will.

– Make large gifts to yourself or others. The only exception to this would be if there had been a regular pattern of large gifts made by the person who’s lost mental capacity, and you could show that they would have continued to make these gifts, had they not lost mental capacity.

Guarantee bonds (insurance)

If you are appointed as a deputy, guardian or controller to look after a relative or friend’s affairs, you may have to take out insurance which will pay out if you do something you shouldn’t with your relative’s finances.

SAVVY TIP: These policies can cost several hundred pounds a year. The amount you have to insure for will be decided by the judge and can vary from individual to individual, depending on the amount of money they have.

Useful links:
There is a range of downloadable guides from the Office of the Pubic Guardian website on your responsibilities if you’re appointed to look after someone else’s financial affairs.

Deputy guidance – how to carry out your duties (property and financial affairs).

Related articles:

Savings accounts if you have power of attorney for a relative

Understanding powers of attorney

Section 117 Aftercare – when your care may be paid for if you’re sectioned

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