How should a deputy manage a person’s investments?

31 May 2019

If you have been appointed as a deputy by the Court of Protection to manage the property and affairs of someone who lacks mental capacity, there are a number of responsibilities that you must undertake. One of these is managing that person’s investments.

As a deputy you will need to manage the protected person’s (P's) money and assets in a manner which reflects their best interests.  A deputy cannot continue to operate P’s financial affairs in the same way as P did before losing capacity. Instead, you will be required to review and vary investments so they remain appropriate and meet P’s current and future needs.

The Office of the Public Guardian (OPG) published new guidance in May 2019 which, among other things, emphasises the importance of proactive investing and the need to seek financial guidance in the majority of cases.

In short, an investment is any placement of P’s money with the intention of gaining a profit. This can include direct investments such as moving money into a bank account, purchasing property and buying shares. It also extends to indirect investments such as making home improvements. The scope is extremely wide and it is sensible for a deputy to cautiously treat any spending which may lead to a profit as an investment.

A court order will usually state that a deputy for property and financial affairs should obtain and take into account proper advice from a financial or investment advisor, especially if P has significant assets. The OPG guidance suggests that you should work with an advisor when you feel that you do not have the relevant investment experience or knowledge.

Furthermore, when preparing annual court reports, you will need to demonstrate that you have consulted and made decisions based on appropriate advice. It is also essential to maintain proper and correct accounts which record all investments for P, as the OPG can ask for these at any time. Working with a suitable advisor will ensure that these requirements are met.

Restrictions on the power of deputies are frequently found in the court order and these often prevent the deputy from making specific investments. For example, purchasing a property with P’s funds often requires court permission. A deputy must always act within the scope of their powers as specified by the court order. If you want to invest outside of your authority, then an application can be made to the court as long as it will be in P’s best interests.

It is best practice for deputies to carefully examine P’s current and long-term financial needs. This will determine the level of investment and the amount of return required for the remainder of P’s life.

While the OPG is unlikely to look favourably on a deputy who does nothing with P’s funds, it is important that you take a cautious approach to investment to meet P’s financial needs.

You should always consult an investment advisor if you do not have relevant knowledge or experience. Most deputies are likely to need such advice. Any investments must always be made within the scope of the court order and with P’s short and long-term needs in mind. Lastly, with any investment it is important to keep in mind the principles of the Mental Capacity Act 2005, in particular that any decision must always be in P’s best interest.

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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

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