Not all Disabilities are Visible
Not all Disabilities are Visible is this year’s theme for The International Day of Persons with Disabilities. It is an observance day promoted by the United Nations since 1992 and is celebrated internationally on 3rd December. The campaign aims to spread awareness and understanding of disabilities that are not always apparent and to remind us all to remove barriers for people living with any form of disability.
Worldwide, more than 1 billion people live with a disability (according to a report by the World Health Organisation) and 450 million of these people live with a mental or neurological condition. Millions of people are also estimated to sustain a brain injury each year and one in 160 children are identified as on the autism spectrum.
As with everybody, it is important for people with disabilities to organise their legal affairs to ensure their wishes are carried out and their best interests are accommodated. Some may be able to organise this independently, whilst other more vulnerable people may need the help of a family member or carer. Either way, the solicitors in our Older and Vulnerable Client team can office advice and support in three areas:
- Wills and Trusts
- Court of Protection Applications
- Looking after people’s financial affairs.
Wills and Trusts
How can I help protect my assets when my child is disabled?
The most common way of ensuring that assets are protected is by leaving your assets in a trust, particularly a Discretionary Trust.
Will my child lose their entitlement to means-tested benefits if assets are left in trust?
The simple answer to this is “no”, however much will depend on the timing and regularity of payments made from the trust. Your trustees should carefully consider (and obtain advice where necessary) the frequency, timing and impact of any proposed distribution or payment.
What kind of trusts are available?
There are broadly three different types of trust:
- A Life Interest Trust, which gives a particular named person or class of beneficiaries, the right to receive income during their lifetime. After their death, the capital, and any income which has not been distributed, would pass to other beneficiaries.
- A Discretionary Trust, which allows the trustees to decide which of the beneficiaries can receive anything from the trust, the amount they are to receive, and the timing of any distribution. This type of trust is often supported with a Letter of Wishes which explains to your trustees how you want them to use the money that they are looking after in the trust.
- A Disabled Person’s Trust, which is a type of life interest trust where the trustees have a discretion as to whether to pay any income to the beneficiary, who is a disabled person, and then after their death the trust is usually wound up and distributed.
Each trust has advantages and disadvantages and advice should be obtained to discuss which type of trust will be best in your particular circumstances.
What happens if I do not leave my assets in a trust?
Your beneficiaries will be entitled to receive their share of your estate. If they receive means-tested benefits then they may lose those benefits. If your beneficiaries are not able to manage their own money, then their Attorney will be able to do so, but if they do not have an Attorney, a Deputy will need to be appointed by the Court of Protection.
Can I name different beneficiaries for different parts of my estate or trust?
Yes, you have a great deal of flexibility in how your estate is divided, who will benefit, and in what circumstances they will benefit.
Can I appoint a guardian for my adult child?
The simple answer is “no”. Once your child is over the age of 18, then his/her finances will be looked after by their DWP appointee (if they are only receiving benefits), their Attorney, if one has been appointed under a Lasting Power of Attorney, or a court appointed Deputy.
Guardianship appointments are only valid whilst your child is under the age of 18, however, you can request your trustees to take into account any views from someone acting as if they were a guardian, if you leave money in trust for your child.
Can I have different executors and trustees?
Yes, it is entirely possible to have different executors from trustees. The executors are responsible for carrying out your wishes, as contained in your Will. They are also responsible for arranging the funeral. The trustees are responsible for looking after any money that is held in trust. They may choose to obtain financial advice from a suitably qualified professional, or legal advice from time to time, to ensure that all the formalities are complied with and that they act within their remit of the trust.
Court of Protection Applications
How can I manage someone else’s finances if I have not been appointed as an Attorney?
The simplest way is to be declared their “appointee” by the Department for Works and Pensions (DWP). This is only useful if the person receives benefits however. In terms of any other finances, then a Deputyship application to the Court of Protection in order for you to be appointed the person’s Deputy will be necessary.
How quickly can I become a Deputy?
Applications to the Court of Protection typically take between 8 to 10 months for an order appointing someone as a Deputy. If the application is contested, then it will take much longer.
How much does it cost to become a Deputy?
The court application fee is currently £365. The court usually awards fixed costs of up to £975 plus VAT. However, if the costs incurred are more than that, then the court will usually allow you to agree your solicitor’s costs, or they can be decided by the Senior Courts Costs Office.
I am acting under a Lasting Power of Attorney for Property and Financial Affairs and wish to make gifts on behalf of the donor, how do I achieve this?
The ability to make gifts on behalf of someone who does not have mental capacity to do so themselves is extremely limited. A court application is usually needed to authorise gifts.
Can I stay in my parent’s house whilst I am looking after them rent free?
If the person you are looking after does not have mental capacity and you are also acting as their Attorney, a court order will usually be needed as there is a conflict of interests. The conflict is your desire not to pay rent, and the donor’s entitlement to receive income from their own property.
What happens if I do not make a Court of Protection Application to make a gift on behalf of someone who lacks mental capacity?
There are a number of different consequences for making gifts on behalf of someone who does not have mental capacity. These include:
- any gifts could be disregarded by HMRC and therefore the value of the gifts will still form part of the person’s estate when they die; and
- the Office of the Public Guardian could apply to the Court of Protection for the Power of Attorney appointing you as an Attorney to be revoked, or for you to be removed as an Attorney. You may be asked to pay the costs of this, as well as being told to repay any monies gifted without the permission of the court.
When acting as an Attorney can I make small gifts for birthdays?
Yes, you may make small reasonable gifts on customary occasions, taking into account the size of the donor’s estate and the size of the gift
Can I make tax saving gifts?
The ability for Attorneys to make gifts is very limited, and tax saving gifts can only be made without a court order in very limited circumstances. This includes using the annual allowance of £3,000 per year. Normally a court order is needed to show that the gift is in the donor’s best interests and therefore allowed.
My relative is the sole trustee of a life policy and has lost mental capacity, what can I do?
A court application will be necessary to appoint someone as a trustee in their place.
I am a Deputy, can I sell the house to pay for care fees?
Your ability to sell the property will be limited by the order appointing you as a Deputy. Most Deputyship orders do not allow a Deputy to sell the property, and so a separate application will be needed allowing you to do so.
Looking after someone’s financial affairs
I cannot manage my financial affairs and want to appoint someone to help me, what should I do?
You can appoint either one or more friends, family members, or professionals to act as an Attorney for you. We act as Attorneys for a number of our clients and manage their financial affairs because they are not able to do so themselves. We meet our clients on a regular basis as well as ensuring all their bills are paid and their money is invested securely, so as to work in their best interests.
I am a Deputy/Attorney for someone who does not have capacity, who can I ask to help manage their finances?
Longmores regularly provide advice to Attorneys and Deputies to explain what an Attorney/Deputy can or cannot do. We can also advise on how to make decisions in someone else’s best interests. Longmores can also provide help in completing the relevant annual returns required by Deputies and to help manage the client’s financial affairs.
Your powers of delegation are quite limited however, although if you do not want to act as an Attorney you can step down.
I have a disability, can I still have a Lasting Power of Attorney?
Providing you have the mental capacity to understand a Lasting Power of Attorney and its nature and effects, then you can have a Lasting Power of Attorney appointing people of your choosing to act for you when you are unable to do so. Our solicitors at Longmores, and in particular our Older and Vulnerable Clients team, specialise in advising clients with varying needs and disabilities and in some cases, when it is appropriate to do so, we can arrange for specialist mental capacity assessments to ensure that any documents you sign are valid and to reduce any chance of them being challenged at a later date.
My parent has just moved into a care home, do I need to sell their house to pay for care?
Funding of care is a complicated topic. In certain circumstances you may have to sell the house, however in other circumstances other options are available: you may decide that it is in their best interests to rent the property, and/or obtain a deferred payment agreement. Alternatively, the house might be disregarded for care fee purposes.
When is a house disregarded for care fee purposes?
The main property is usually disregarded for care fee purposes when a qualifying person is still living in the property. The most common examples are where there is a person over the age of 60, or under 18 still living there.
I am an Attorney – can I spend the donor’s money as I want?
When acting as an Attorney you can only use the donor’s money if you decide that it is in their best interests to spend their money in a particular way. You must also act in a way that is least restrictive of their rights and freedoms.
What paperwork do I need to keep when acting as an Attorney or Deputy?
You should keep all receipts and keep a note of important decisions that have been made. A Deputy needs to complete an annual return every year and send it to the Office of the Public Guardian, explaining what money has been received and what money has been paid out. Although an Attorney does not need to complete the same report, the Office of the Public Guardian can ask for details of monies received and spent by the Attorney as well as investigating any suspicious activity by an Attorney.
Here to Help
For advice for anybody with a disability who would like help with a will, Court of Protection application or their financial affairs, get in touch with our Older & Vulnerable client team
Charles Fraser: Senior Solicitor and Head of Older and Vulnerable Client team
Victoria Wood: Associate Solicitor in the Older and Vulnerable Client team
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.