What’s in a name?  A rose by any other name would smell as sweet

Where you are signing a Lasting Power of Attorney there are even more specific instructions – and these apply not only to you, the person giving the power, but also to your attorneys and the witnesses.  This is one of the reasons why solicitors like to have the attorneys in the office to sign – because they can ensure everything is signed correctly, in the right place and in the right order.

What’s in a name?  A rose by any other name would smell as sweet

 

When you put your name to a legal document, it’s considered that you understood the effect of the document that you signed – if you sign it in your own solicitor’s office, it is presumed that you have asked for and received advice on what you are signing, and this forms part of the legal service that you have paid for.

Where you are signing a Lasting Power of Attorney there are even more specific instructions – and these apply not only to you, the person giving the power, but also to your attorneys and the witnesses.  This is one of the reasons why solicitors like to have the attorneys in the office to sign – because they can ensure everything is signed correctly, in the right place and in the right order.

The regulations are very strict on who can sign the document, how they sign it, and who can witness signatures, and in what order these can occur – and if the regulations are not followed, there is a high possibility that the document will be rejected as being invalid.

  • Your signature – this should be your usual signature – even if you do not use your full name or all your initials in your signature.
  • Your full name – this should be your full legal name – Charles Philip Arthur George Mountbatten-Windsor (as an example).

If there is a space for your address (as there is for witnesses to both the donor’s signature and the attorney’s signatures) then your complete address, including postcode, must be inserted, legibly.  A failure to include an address, or with any part missing (including part of the postcode), could result in rejection by the Office of the Public Guardian.

The documents do state very clearly that the donor should sign first, and that their signature should be witnessed, before the certificate provider signs the document.  Each attorney should sign after the certificate provider has signed – it is acceptable for all to be signed on the same day, but not to be signed in any other order.

 

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The handbag case – unauthorised expenses and gifts by a deputy

They should have been aware of the law regarding their role and responsibilities. Ignorance is no excuse. The fact that GM’s remaining assets were in the names of one or other of the applicants, rather than in GM’s name, is a further example of what is, at best, ignorance, and, at worst, stealth.

I realise that MJ and JM are the only visitors that GM receives, but this does not give them a licence to loot, and I was unimpressed by the veiled threat that, if the court were to remove them as deputies, they would find it difficult to continue seeing GM.

The applicants were seeking approval of gifts and expenses totalling £277,811.74. The approval of only £73,352 has left them personally liable to GM’s estate in the sum of £204,459.74, which they must pay back.

Re GM (Neutral Citation Number: [2013] EWCOP 2966)

This is another case which makes for valuable reading – the whole transcript can be found here   It follows Re Buckley and if it can be said that that is the reptile case, then this might be called the handbag case, since designer handbags and watches “given” by Mrs GM, to the deputies feature uncomfortably alongside the deputies’ decisions on what clothes GM was allowed to purchase.

The facts: 

Mrs GM was a widow of 93, and had borne one daughter, Barbara, who had predeceased her, a spinster without issue.  Mrs GM had no will, and on intestacy her estate would devolve on her late brother’s daughter and the issue of her late brother’s son.

Mrs GM’s deputies were her late husband’s niece (JM) and grandniece (MJ) and therefore they were related only by marriage and would not be entitled on intestacy.

Mrs GM had approximately £200,000 of her own money, and inherited approximately £300,000 from Barbara.  She had a limited income of £200 per week and her nursing home fees were approximately £500 a week.  She suffered from vascular dementia, and was therefore unlikely to recover capacity.   She did enjoy some activities, although these were limited by the apparent unavailability of funds.

JM and MJ were appointed deputies in August 2010.  A representative from the Office of the Public Guardian met them at the nursing home, and on hearing that some gifts had been made, although not aware of the amounts, suggested that they seek the court’s retrospective approval, which they did, a year later, in October 2011.  Thereafter, the Office of the Public Guardian and the Court process gathered initial and then further information and momentum until the hearing to which the judgement relates, in April 2013.

The gifts 

Sequinned dresses and a matter of taste 

In contrast to the somewhat luxurious gifts acquired by the Deputies and their families, the official visitor from the Office of the Public Guardian reported that a visit to see Mrs GM had revealed that the nursing home thought that GM was very low on funds, as although her care fees were paid promptly by bankers draft, her ancillary expenditure account of less than £500 a year often ran very low and the nieces had to be contacted often with requests for more funds.  It was reported that the nieces appeared reluctant to pay for chiropody, on the basis that GM was diabetic and strongly queried whether such expenses should be paid from NHS funds.  The nursing home took the decision to charge reduced fees to GM as they did not want to lose her and were aware that funds were very short.  GM had told them that she did not have the money to buy things, and the Visitor commented that in her professional opinion, GM would not have sufficient awareness to know how much the home would charge her or even that her accommodation had to be paid for.

On a practical note, the nursing home commented that they considered that an increase in the yearly allowance by a further £100 would greatly enhance her life, as it would permit GM to choose some clothes for herself from those made available to the home.  In submissions, the deputies said that they provided clothes for GM as she tended to purchase clothes that were “cheap and tawdry in appearance and quality”.  GM appears to prefer sequinned dresses, which are “terribly difficult to wash and iron”.  The deputies did concede that they were not themselves responsible for the laundering of GM’s clothes, as the nursing home took care of all laundry

Master Lush included references to these matters in his judgment because although it might seem insignificant, it was indicative of the lack of control GM was allowed to have over her arrangements, even in the smallest and most limited of ways.  Master Lush considered again the duty of deputies to assist and support the Patient, and that in this, as in all the gift giving, whether to family or charities, it appeared as if GM had not been consulted in any way, whether supported or not in her understanding.  As the choice of clothing was apparently one that GM would take great pleasure in, the deputies substituting their judgment for the choices of what they thought GM would have wanted was also in excess of their role, albeit in a minor way.

Misunderstanding of the words in the appointment of deputies 

As might be expected, the lay reading of words can sometimes differ from the legal understanding of them.  It appears that the deputies had considered the wording in the appointment that they “may jointly and severally (without obtaining any further authority from the court) dispose of money or property of GM by way of gift to any charity to which she made or might have been expected to make gifts and on customary occasions to persons who are related to or connected with her, provided that the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of her estate” (this is part of the standard wording on appointment) to mean that they should allocate GM a sum of £200,000 in light of her life expectancy, and then dispose of the balance of this to members of Barbara’s extended family – this was mentioned, with startling clarity in their initial submissions to the court:  “ we acted as we thought the order granted us, to gift and donate in relation to the size of the estate.  As GM is 92 years old, we believe approximately £200,000 to be adequate and if this is not enough [for her to live on] there is no way she will go short”

Such misunderstanding might be understandable, but when dealing with another person’s money, it might on the other hand be considered reasonable to seek legal advice before disposing of another’s money and property to such a great extent, especially if it is to benefit those people who are not entitled on intestacy or under the will of a patient.  Where a deputy or attorney seeks to benefit themselves from any gift, they should make very certain of their authority.  The Court simply did not believe the deputies – and said that their ignorance was no excuse.

Master Lush, in his judgment emphasises that:

It is important that deputies and attorneys should

  • realise that they have only a very limited authority to make gifts
  • understand why that authority is limited
  • be aware that, in an appropriate case, they may apply to the Court of Protection for more extensive gift-giving powers.

Master Lush further described the words “having regard to all the circumstances” as meaning:

  1. the first and paramount consideration is whether the gift is in the Patient’s best interests;
  2. the extent to which the Patient was in the habit of making gifts and loans of a particular size before the onset of incapacity;
  3. the Patient’s anticipated life expectancy;
  4. the possibility that the Patient may require nursing or residential care and the projected cost of such care
  5. whether the Patient is in receipt of NHS continuing Healthcare or aftercare pursuant to s117 of the Mental Health Act
  6. the extent to which any gifts would interfere with the devolution of the Patient’s estate on will or intestacy; and
  7. the impact of Inheritance Tax on the patient’s death.

The size of the gifts and what is the limit that should be given 

Master Lush acknowledged that there was no specific limit or guidelines on limits of gifts that might be made by deputies in the United Kingdom, but considered the law in Alberta, Canada (gifts shall not exceed 5% of the represented adult’s taxable income for the previous year) and in British Columbia (the total value of all gifts loans and charitable gifts made by an attorney in a year shall not exceed 10% of the adult’s taxable income for the previous year, and $5,000).  In the UK, the wording of the order envisages a threshold, beyond which any gifting would be considered unreasonable (known now as the “reasonableness threshold”).  Re Buckley considered that a gift would be below the threshold if it was so small for it to be disproportionate to make a formal application to the court.  For further clarification, Master Lush indicated that this threshold might be construed as covering the annual Inheritance Tax exemption of up to £3000 and the annual small gifts (£250) exemption up to a maximum of ten people in circumstances where

  1. the Patient’s estate exceeded one Nil Rate Band in value;
  2. the Patient had a life expectancy of less than five years; and
  3. the gifts are affordable having regard to the Patient’s current and anticipated care costs and will not affect the Patient’s quality of life;

In the case of GM, Master Lush deduced that the reasonableness threshold would be £4,500 a year, and that in order for any gift to be made it would have to be made to any person who was connected to GM or a relative of GM – this limited the gifts to MJ and JM, their children and grandchildren (and not to spouses)

Why this is so important as a case: 

Whilst Re Buckley was crucial in further defining what duties of investment the attorney had for Miss Buckley, whose affairs she was responsible for, Re GM is very welcome advice on what the court considers to be the appropriate level of gifts that a deputy might make from the funds to which they have access, after their appointment.

The Court of Protection has, historically, been unwilling to give advice over the telephone helpline about what are “appropriate” levels of gifts or expenses, and has proffered the advice that if the attorneys or deputies are in doubt, then they must make an application to the court.  Whilst this is still the case, Re GM does provide more guidance on what the court considers reasonable, and most helpfully, does so in a case where the patient had an average value estate – one which practitioners will encounter in practice reasonably often – of under a million pounds, but above the inheritance tax threshold, and where the income levels of an incapacitated person are low – £200 a week, from state benefits and a small pension.  It also emphasises the distinction between expenses that would be recoverable and the gratuitous benefit of a gift.

It appears from the transcript that the deputies were acting without the benefit of both legal advice, and without having taken on board the standard and publicly available advice produced by the court of protection and the office of the public guardian.  They appear to have taken the order of first appointment very much at face value and interpreted it in a way that seemed suitable to them, without appearing to have any idea of the magnitude of the errors they were making, nor of the potential criminal sanctions that the court has when adjudicating on such matters.  This has been a very unhappy result for Mrs GM personally, but on the other hand, may have shown a spotlight on what was perhaps not clear before.

The Master in this case ordered that the gifts made by the deputies had been excessive, that the expenses claimed were disproportionate and amounted less to expenses and more to gifts, and that they had acted in contravention of the authority that they had been given under the Mental Health Act, that the deputies’ appointment should be revoked and that they should return to the estate that which they had misappropriated.

Memorable parts of the judgment here:

 

  1. I do not accept that the gifts they made were in GM’s best interests. They are completely out of character with any gifts she made before the onset of dementia. There was no consultation with her before they were made and there was no attempt to permit and encourage her to participate in the decision-making process, or to ascertain her present wishes and feelings.
  2. Nor do I accept the applicants’ argument that they believed that the order appointing them allowed them to make gifts on such an extensive scale. They should have been aware of the law regarding their role and responsibilities. Ignorance is no excuse.
  3. The fact that GM’s remaining assets were in the names of one or other of the applicants, rather than in GM’s name, is a further example of what is, at best, ignorance, and, at worst, stealth.
  4. I realise that MJ and JM are the only visitors that GM receives, but this does not give them a licence to loot, and I was unimpressed by the veiled threat that, if the court were to remove them as deputies, they would find it difficult to continue seeing GM.
  1. The applicants were seeking approval of gifts and expenses totalling £277,811.74. The approval of only £73,352 has left them personally liable to GM’s estate in the sum of £204,459.74, which they must pay back.
  2. For the purposes of section 16(8) of the Mental Capacity Act, I am satisfied that the deputies have behaved in a way that contravened the authority conferred on them by the court and was not in GM’s best interests.
  3. I am not persuaded by any of Miss Bretherton’s submissions on their behalf, and I have no hesitation in revoking their appointment as deputies. GM’s finances are in disarray because of their conduct, and it is in her best interests that someone with experience of cases of unjust enrichment and restitution, such as a panel deputy, is appointed to manage her affairs in their place.

 

 

Day -v- Harris [2013], Curnock v IRC, Phizackerley

Just a quick reminder to myself that these are the current cases concerned the ability of attorneys to make valid gifts, and the interaction with IHT.

Day -v- Harris 2013 Day v Harris and others Same v Royal College of Music and another (Arnold and another, interpleader claimants) [2013] EWCA Civ 191; [2013] WLR (D) 112 and PDF of judgment concerns a registered EPA – and gifts made by the attorney (who was also a joint holder of a bank account) and whether the gifts that he had made were as attorney for the donor, or in another capacity as being access to the joint bank account as was his right as a joint bank account signatory

In my judgment, it remained open to Mr Day to operate the bank account after registration of the EPA as he had done before such registration. He could not use it to benefit himself without the full, free and informed consent of Sir Malcolm but, if he had that consent, as the judge held he did, gifts made by drawing cheques on the joint account were not invalidated by the effect of section 7(1)(c) of the Act even though made after registration of the EPA.

Had the gifts not been validly made, then they were still part of the donor’s estate for IHT purposes – on the basis of Curnock v IRC, Curnock v IRC [2003] SWTI 1053 where a cheque was not encashed prior to the death of the donor – and therefore the gift was not complete by the time of death.  This could also be seen in conjunction with Phizackerley, Personal Representatives of Phizackerley v HMRC [2007] SpC 591

An earlier version of Day -v- Harris, in 2010 concerned the nature of the accounting to be made for the researches of the executor into the amount of the gifts that were made and how far back the executor should go in attempting to ascertain what gifts had been made, and whether the expenses of the executor in doing so were reasonable.

Care Act and Slough Borough Council, Financial LPAs and Deputyships with Deferred Payment Arrangements

As of 1 April the first part of the new Care Act  comes into effect.

Many things change: for example, CRAG guidance will cease to apply and the Deferred Payments Scheme will change.

Instead of CRAG we will have the Care and Support Statutory Guidance:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/366104/43380_23902777_Care_Act_Book.pdf

The relevant SI under the Care Act 2014 which sits on top of this Statutory Guidance is the Care and Support (Charging and Assessment of Resources) Regulations 2014

http://www.legislation.gov.uk/uksi/2014/2672/contents/made

The Care Act 2014 sits on top of them all:

http://www.legislation.gov.uk/ukpga/2014/23/contents/enacted

From April 1 the discretionary system of deferred payments (with charge on the resident’s house) is being replaced by a mandatory system whereby eligible users will be entitled to the deferment option (but there are qualifying conditions).

Here is the information for the public from Slough:

https://www.slough.gov.uk/health-and-social-care/the-care-act.aspx

https://www.slough.gov.uk/downloads/care-and-support-FAQs.pdf

And the internal report for the benefit of the council.http://www.slough.gov.uk/moderngov/documents/s37092/Report.pdf

Mental Capacity Slough will assure itself that the person requesting the DPA has the requisite mental capacity to enter into such an agreement. Where a person who lacks capacity has either a Finance and Property Attorney or a Deputy, evidence of this will be required before the representative can sign the DPA on the person’s behalf. Where the person who lacks capacity is unrepresented, an application must be made to the Court of Protection: § A family member willing to take up the role may make a Deputyship § In the absence of such a candidate an application may be made for a Panel Deputy to be appointed § Slough may take the view that it will apply for Deputyship, depending on the Council’s resources and the composition and value of the person’s assets

Lots of reading…

Law Society research: millions of Britons have no will – The Law Society

Law Society research: millions of Britons have no will – The Law Society.

 

It is, as we have said for a long time, the exception rather than the rule.  Somewhat horrifying to think that over two thirds of us do not have wills.

I’m dealing with some intestacies at the moment, and practically speaking, although we can deal with things amicably  (hopefully) within a family, the extra work involved, and the trauma for the family of deciding who is going to do what, who is going to be responsible for making difficult decisions, and the fact that no-one is immediately able to do things on behalf of the estate is tragic.  For less than £200, the client could have saved hours of worry, hours of legal time, so much angst and family difficulties, and prevented the delay in administration – if there had been a will, the house could be on the market now – the estate agents will not risk signing a contract with someone who may not be the administrator, or they might not get their money back.

That is just the problem – Lasting Powers of Attorney are needed in lifetime to make life easier and better for the living who are vulnerable.  Wills are your last chance to make things easier for those you leave behind.  And if you are not a single person with no spouse or children, or grandchildren, then there are all those who are depending on you.  And wishing that you had appointed guardians, and made things clear for you.