Deputies and Attorneys who manage an incapacitated or a vulnerable person’s (“P”) finances have to be careful about releasing P’s funds to others, including to themselves.
If a family member or the Deputy/Attorney is providing care to person who lacks capacity and is being paid for it from their funds, known as a gratuitous care allowance should the courts permission be sought first and how would the court determine the reasonableness of such payments. This issue was considered in detail in the case of HC [2015].
Case of Re HC [2015] EWCOP29
In this case, the vulnerable person, HC, who had 5 children, had developed vascular dementia in 2004. When she subsequently became incapable of making financial decisions, one of her children, CC, was appointed as her Deputy for Property and Affairs in September 2009.
CC, at the time, was a Quantity Surveyor. He decided to give up work and, with the agreement of his siblings, agreed to care for HC on a full time basis. CC paid himself for the care he provided to his mother and this was discussed with the family members prior to payment being made. The courts approval was not sought before CC started making payments to himself.
In 2014, the Office of the Public Guardian’s supervisory team reviewed CC’s annual Deputyship Reports submitted and became concerned regarding the lack of evidence provided by CC to support HC’s annual expenditure. They were also concerned about the care costs that CC was paying to himself. The Public Guardian made an application to the Court of Protection for an Order that CC provides the Office of the Public Guardian with a detailed account, with full supporting documents, failing which CC should be removed as Deputy. The Public Guardian also asked the Court of Protection to consider the reasonableness of the care costs that CC was paying to himself and to another family member and whether these payments constituted unauthorised gifts.
The decision
In this case, Senior Judge Lush explained how the reasonableness of claims for the cost of care provided by family members would be assessed by the Court of Protection. The Court would broadly apply the criteria applied by the Queen’s Bench Division of the High Court when quantifying care allowance for family members who provide care to someone with a brain injury. The Court of Protection would therefore look at the commercial cost of care as the ceiling and reduce it by 20% because the HM Revenue and Customs regards payments to family members as voluntary payments and not as part of their income.
In the case of Re HC [2015], CC explained that before he started caring for HC, the family had a discussion and considered various options:
- Sending HC to a nursing home at a cost of £3,557.50 per month;
- Paying for private care at a cost of £3,900 per month; or
- CC providing HC with personal care within the home environment at a cost of £1,500 per month.
Having considered the various options, the family decided on the third option since they considered it to be in HC’s best interests. Senior Judge Lush was satisfied with the explanations given by CC and the family members. In his opinion, the payments CC made to himself for caring for HC were not unreasonable. If anything, they were affordable and less expensive than alternative care proposals.
The Judge therefore retrospectively approved and authorised the costs paid to the Deputy for caring for HC from September 2009. In addition, going forwards, the Judge authorised the Deputy to pay himself a sum not exceeding £1,500 per month for the provision of care services and these payments would be index-linked each year to reflect inflation and to avoid the need for repeat applications to the Court of Protection to re-calculate the care allowance.
Senior Judge Lush also did not see any reason for removing CC as Deputy, but ordered him to keep invoices, receipts and all other financial records.
It is worth noting that in the course of the same proceedings, CC had applied to be appointed as HC’s Personal Welfare Deputy. Senior Judge Lush dismissed his application as there was no apparent need for such an appointment at present.
Conclusion
Court of protection problems are common. To avoid issues, deputies and attorneys should carefully consider how much they can reasonably pay themselves and family members for providing care to P. Before any payments are made, it is advisable to seek legal advise on making an application to the Court of Protection for their approval of care allowance.
