Knowledge and approval - When is a will suspicious?
Below is a summary on recent cases in the Court of Protection.
If you should have any questions in relation to any of the issues raised, please contact a member of our team.
People who lack mental capacity may have a ‘Deputy’, who is a person appointed by the Court of Protection to look after their property and financial affairs. Although, Deputies usually have very wide powers the Court can be very reluctant to let them make large gifts to family members. This is because the money may well be needed for other things, such as care costs.
In Court of Protection case of Julia Lomas and AK (by his litigation friend the Official Solicitor)’ ( EWHC B11 (COP), the Deputy asked the Court for permission to make a loan to the parents of a young boy from his personal injury award to buy a family property in Pakistan.
Julia Lomas is the Deputy for AK, an 11-year-old boy who suffers from cerebral palsy as a result of clinical negligence at birth. A successful personal injury claim was made and AK was awarded a lump sum of just over £1 million plus annual periodical payments of £140,000, rising eventually to £200,000 as he gets older. Sadly, AK’s life expectancy is predicted to be only age 15, and probably not over 20.
AK’s expenditure on care is relatively low as much of it is provided by his family. He therefore has surplus income of approx. £95,000 per year.
£150,000 gift is declined
The Deputy applied to the Court for authority to make a gift to AK’s parents of £150,000 to allow them to purchase and adapt a property in Pakistan for the family to stay in for six months out of the year. She suggested that a gift would be preferable to AK making the investment directly because of the huge administrative burden on the Deputy of collecting and translating receipts for the building work.
AK was represented by the Official Solicitor, who was not convinced that a gift was the way to go. He was concerned that there were no guarantees that AK’s parents would use the money for the purpose it was intended. He fully accepted that AK’s quality of life would be enhanced. However, he felt that it may well be best for AK to invest in the land directly.
The Court also considered a number of other factors, including:
The Court accepted that it was in AK’s best interests to be able to spend time with his family in a suitably adapted property in Pakistan. However, the Court was not happy about making an outright gift because this would reduce the value of AK’s Estate and there would be no guarantee that his parents would spend the money as intended (although there was certainly no evidence that this was likely).
A clever solution to reach the same goal
The ingenious solution was for AK to make an interest-free loan of £150,000 to his parents. This would be repayable in 10 annual instalments of £15,000. The Deputy was then authorised to make annual gifts to the parents of, you guessed it, £15,000 to enable them to make the loan repayments. These annual gifts would only be made if AK’s finances permitted, thus keeping things flexible enough to adapt to future changes.
As an aside, although the Court was at pains to emphasise that Inheritance Tax (IHT) was neither here nor there, the Court suggested that the gifts would be exempt from IHT on the basis that they would be covered by the regular gifts out of income exemption.
A disabled man, MN, was living in an adult residential home where the placement was funded by A Clinical Commissioning Group (ACCG). MN had contact with his parents at the home three times a week and in the community once a month.
MN’s parents wanted ACCG to fund a care package which would allow him to live at home with them but ACCG refused. The parents asked the Court of Protection to intervene in the case of case of MN ( EWHC 3859 (COP)).
The Court held that it did not have the jurisdiction to consider hypothetical options – only those options which were actually available to MN.
The only circumstances in which the Court could consider such options would be if there had been a successful challenge to the decision under the Human Rights Act. Here, there had been no such challenge.
Note that the Court did not address the issue of whether it would actually be in MN’s best interests to live with his family. As a minor he had been subject to a care order on the grounds of neglect by his parents. This was referred to in the judgment as a matter of fact but not explored.
The Court of Protection case of JS and KB, MP (Property and Financial Affairs of DB) -  EWHC 483 (COP) was the culmination of several years’ of dispute between a brother and sister regarding the financial affairs of their elderly mother.
The mother (DB) suffered from dementia. Her daughter, JS, was not appointed as her attorney or deputy but nevertheless managed to sell her home ‘over her head’ and use the proceeds to buy a property which was held in her own name.
JS subsequently applied to be appointed as her mother’s deputy but her application was rejected on the papers. In her application, she had talked about making a ‘loan’ to her mother to purchase the property and the judge felt she had a conflict of interest.
At some point her brother, KB, asked the OPG to investigate. JS continued to push to be appointed as Deputy long after, according to the Court, it was clear that she should have given up.
By the time of this hearing a panel deputy, a local solicitor (MP), had been appointed and had been authorised to convey the title of the property back into DB’s name.
The purpose of the hearing was to decide who should bear the costs. The general rule states that the costs of the proceedings should be borne from DB’s estate.
However, the judge departed from this rule. Based on JS’s conduct, he ordered her to pay four fifths of DB’s costs and two thirds of KB’s costs. He also gave leave for the deputy to investigate whether equity could be released from DB’s home to make a loan to JS to cover the costs, because her financial circumstances were limited.
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