Capacity and Decision-Making

In the event that a person becomes unable to manage their own affairs it is very difficult for those around them to deal with assets and interact with institutions on their behalf unless that person has appointed attorneys in a Lasting Power of Attorney (“LPA”). Without a LPA it is necessary to gain the permission of the court to appoint a deputy to look after a person’s affairs for them which is both time consuming and expensive.

Lasting Powers of Attorney

A Lasting Power of Attorney is a legal document in which a person (“the donor”) gives someone the ability to make decisions on their behalf. Importantly, once the LPA is registered at the Office of the Public Guardian, the authority of an attorney, appointed by an LPA, continues even in the event that the donor becomes unable to manage his own affairs.

There are two different types of LPA: Property and Financial Affairs and Health and Welfare.  A donor can decide to make either or both LPAs. An attorney appointed under an LPA for Property and Financial Affairs has authority to do things such as buy or sell property, operate bank accounts and collect pension payments. An attorney for Health and Welfare is able to decide matters concerning the donor’s residence, medical treatment, who may have contact with the donor and they can also be given power to consent or refuse consent to life-sustaining treatment for the donor. However, LPAs can only be created by people who have mental capacity.

Deputyship

If a person has already lost capacity, in order for someone to gain authority to make decisions on the person’s behalf it is necessary to apply to the Court of Protection (“COP”) to become a ‘deputy’.

The COP has the power to appoint suitable and competent people to act as deputies for those who do not have capacity and are therefore in a vulnerable position.

In considering whether to make an appointment the COP will assess whether the appointment is ‘necessary’. The law states that the appointment of deputies must be in the best interests of the person who is said to lack mental capacity. The principles underpinning the law relating to incapacity include: giving a person all appropriate help to make decisions before it is concluded that they cannot make decisions for themselves. The aim should be to ensure that before decisions are made or acts carried out regard is given to whether it is the least restrictive intervention to that person’s rights and freedom of action.

Deputies, once appointed, are authorised to make decisions on a person’s behalf. As with LPAs there are 2 types of deputyship which can be applied for: Property and Financial Affairs and Personal Welfare.

The Test for Capacity

The law on capacity states that a person is presumed to have capacity unless the contrary is established. People are considered to lack capacity if they have an impairment that causes them to be unable to make a decision. The Mental Capacity Act 2005 states that a person is unable to make a decision if he is unable to understand the information relevant to the decision, retain that information, use or weigh that information to make the decision and then communicate the decision.

The possible causes of incapacity are numerous and include dementia, acute confusion, depression, strokes, psychotic illness, learning difficulties, distress or emotional disturbance.

Safeguards and Application Process

As part of the deputy application process an Assessment of Capacity form needs to be completed by a GP or other registered practitioner such as a psychiatrist or social worker this will then be submitted to the COP.

The Assessment of Capacity is just one of the safeguards in place to ensure as far as possible that the powers granted to deputies are not abused. To become a personal welfare deputy it is necessary in the first instance to gain permission from the court to make an application to commence proceedings.

In addition to the Assessment of Capacity and the permission process, forms must be completed with the personal details of the applicant, detailed information about the person’s assets and finances, their present needs. The Deputies will also have to fill out a deputy declaration stating why they wish to be a deputy and why they believe they are an appropriate deputy.

The COP requires applicants to formally notify the person to whom the application relates and the applicant must also identify and notify at least three people that the application is being made, including all close relatives unless there is good reason not to notify them. Those notified are then given the opportunity to apply to be joined as a party in the proceedings. Once the COP is informed that notification has taken place they will let the applicant know whether they have been successful within 16 weeks.

If an order is made the applicant must notify the person concerned again. The applicant must also pay a ‘security bond’ which is in effect an insurance policy to protect the person’s money from any negligence or fraud on the applicant’s part.

Wills and Capacity

A person cannot make a Will unless they have capacity. Appointed attorneys and deputies do not have authority to make Wills on behalf of people. In certain circumstances the court will execute a Statutory Will for a person without capacity. However, the court must be satisfied there are sufficient grounds for departing from a person’s existing arrangements and the COP’s procedure must be followed. This process tends to be expensive and cumbersome.

Whilst deputy applications and statutory Wills provide limited solutions for those who have already lost capacity they are complicated and time-consuming processes. In comparison, LPAs and Wills are relatively straightforward and cost-effective documents which allow you to make choices concerning who looks after you and your assets and who receives those assets on your death. Therefore in the event that you do lose capacity and become unable to manage your affairs, your family will not have the obstacles of a Deputy application and/or a Statutory Will. Creating LPAs and Wills provide reassurance and a degree of control and certainty over future events.

If you need to create LPAs or a Will or if you are concerned about a family member’s capacity then please do not hesitate to contact us.

This article was written by Ian Bradshaw, with assistance from trainee solicitor Freya Marks.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.  If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.