why a deputyship should be avoided
Deputyships are arranged through the Court of Protection if capacity is lost and there is no Lasting Power of Attorney but they should be avoided. Our Home Page has a short video from the Morning Show which mentions the much higher cost of Deputyships. Please use the READ MORE link below to understand more about Deputyships. You may download a copy.
A while ago the Ministry of Justice, ran a campaign to increase awareness about Lasting Powers of Attorney (LPA). Loss of mental capacity is not confined to the elderly as demonstrated by broadcaster Andrew Marr. Mr Marr seemed fit and his stroke, at the age of 53, was a shock to all. It also showed that loss of capacity is not just about dementia and is not always permanent. Even so it can profoundly affect everything. We all understand that a Will is important but often people don’t realize that a Lasting Power of Attorney can be just as critical. And many have never even heard of Deputyships.
So let’s take a look………
misconceptions and concerns
In March 2014 the Office of the Public Guardian (OPG) published a MORI survey demonstrating the low public awareness of LPAs. Many aged 45 plus had very little knowledge while a third of those interested in making one preferred to wait until their capacity was already affected. A bit like waiting until you retire before starting a pension.
Many believe they can simply take over if a family member loses capacity but that is not so as they have no authority to do so and Lasting Power of Attorney can only be made while a person still has mental capacity. If capacity is already lost a Deputy must be appointed by the Court of Protection. This can be a family member but the Court may well appoint a professional Deputy which could even be the local authority.
Care costs are an emotive subject and loss of capacity makes it more likely that care will be needed. It is, perhaps, surprising that Local Authorities can become a Deputy for people in their care as responsibility for the finances of a person lacking capacity and benefitting financially from that position would certainly seem to be conflict of interest. In January 2015 the Ministry of Justice confirmed to me that, while deputies are a small proportion of those who look after people’s affairs, 35.75% of all Deputies in England and Wales are Local Authorities.
The Executive Summary to the MORI survey stated that: “The OPG wishes to increase LPA applications in order to minimise the number of deputyships required for a number of reasons… it allows individuals to have an attorney that they choose, rather than a deputy that the court appoints, ensuring the individual has involvement and a say as to how they wish to have either their financial affairs or wellbeing taken care of….”
what do people see as the main benefits?
Those who had acted as an attorney, or a deputy, or who knew someone who had lost capacity, were the most positive about the benefits of an LPA. The benefits highlighted were:
1. Being able to choose those who would act for them.
2. To make things easier for their relatives if they lost capacity.
3. To make it more likely that decisions which affected them would be made in their best interests.
4. To make it more likely that they would be cared for in the way they would have wanted.
Anyone with business interests, financial interests needing regular review, who is a landlord, or who regularly spends time abroad should have a financial affairs LPA regardless of age. Then, if something unexpected occurs, whether permanent or temporary, their financial interests are protected. If they recover they retake control.
Age may eventually take its toll and loss of mental capacity might occur or it might not. Having a Lasting Power of Attorney in place can still make things so much easier. My mother is nearly 92 and suffers from arthritis, leukaemia, poor hearing and is in care. She retains mental capacity but is frail. She cannot easily visit the bank and finds it difficult to deal with people on the phone. The internet is science fiction to her. She made and registered a Lasting Power of Attorney and chose to make it effective immediately. She directs her attorneys in dealing with her affairs. This makes life much easier for her and she retains control. If she loses capacity everything can continue seamlessly and in accordance with directions she has already given with no need to appoint a Deputy, or to be subject to the Court of Protection or pay the vastly increased fees this would entail.
lasting power of attorney and the public guardian
There are two types of LPA; one dealing with Property and Financial Affairs and one with Health & Welfare. The person making an LPA (the ‘Donor’) chooses people they trust to be their attorneys. Unfortunately, the official guidance ignores certain potential problems and while one can contact the Office of the Public Guardian for information one must be aware that they are not allowed to give legal advice! Donors may place restrictions and give directions as to how their affairs are to be administered although professional advice is often required to make sure that any such restrictions and directions are acceptable to the Office of The Public Guardian or the LPA may be rejected at registration.
Where a problem can be overcome by removing an unworkable or unacceptable restriction the OPG will apply to the Court of Protection to remove it rather than reject the LPA. However, careful wording might have satisfied both the law and the Donor. There may be problems that cannot be overcome; for example, if an attorney or a witness is a person disqualified under the legislation. If the LPA is not registered until capacity is lost (or if no LPA is made of course) then there is no remedy via the LPA route and the only solution is a Deputyship. Martin Lewis, writing in The Telegraph, said Deputyships are “a nightmare for many families, a hardcore hassle that can drag on for many months, with legal fees that can be in the thousands.”
If capacity is already lost and there is no LPA, or if there is a problem with an unregistered LPA that cannot be rectified, someone must apply to the Court of Protection who will, if they support the appointment, grant authority. There are no advantages to the individual or their family in a Deputyship over a Lasting Power of Attorney. The MORI survey found that the experience of becoming a deputy had led many to set up LPAs for themselves soon afterwards which itself speaks volumes.
Deputies are supervised and the level required is assessed. Applying to be a deputy is a lengthy, time consuming process and the costs of supervision can be high. A security bond must be taken out (unless they are a local authority) which is an annual cost.
Senior Judge Lush has said, “unlike other deputies, a local authority deputy is not, as a general rule, required to provide security by way of a bond. If, contrary to all expectations, a local authority behaves in a fashion that is contrary to the Act and the Code and causes (the person for whom they are acting) financial loss, that loss cannot be made immediately good by calling in a bond and recovery of any loss will therefore be a more complex and inevitably more costly process.”
the government campaign
At the commencement of the government’s campaign in 2015 I spoke to Hugo Biggs at the Ministry of Justice. He confirmed that the emphasis is on encouraging people to appoint attorneys of their choosing while they have capacity to do so rather than have to go through the Court of Protection as the government recognises that making a Lasting Power of Attorney is by far the best way forward.
Finally, as Simon Hughes said while serving as Minister of State at The Ministry of Justice, “We need to have discussions so people choose the right people to help them. This is not an issue to shy away from.”
The cost of a single Lasting Power of Attorney can vary greatly. An average figure is often quoted as being around £400 but it can be anything up to £1,000 depending on what level of service is being provided and who is providing it. It is more expensive than the old Enduring Power of Attorney as it is a lot more complicated and much more time consuming. However, the complexity does mean that more people require professional assistance and the cost of a Deputyship (see Deputyship fees on the following page) puts the cost of an LPA into perspective. Professional Will Services charges a very reasonable fee for the work involved whereas the costs of a Deputyship can be horrendous.
The cost of an LPA is also just a one off fee whereas a Deputyship entails not just high initial fees but also ongoing annual costs (see below). The service provided by Professional Will Services is used by many professionals for their clients because of the level of service and advice given and the very reasonable fees. To enquire about current fees please call the helpline or go to the Information Desk on this site.
deputyship costs (taken from Court of Protection website)
initial costs for a lay deputy:
Medical evidence will be needed and a Medical practitioner will usually charge a fee for providing it. This fee can range from £50 to £300.
Solicitor’s fees for making the application start (including VAT) from £1,050.00.
The Court charges an application fee of £400
There is also an appointment of Deputy fee £125
Assessment charge to fix annual supervision fee £100
ongoing annual fees:
The annual supervision fee which will either be £35 or £320.
Additionally, the Deputy has to take out a ‘security bond’ and this is payable annually. The level of the bond is set by the Court; the more assets a person has (and therefore the more responsibility the Deputy has), the higher the bond is set.
The Court of Protection may limit the appointment of a deputy to a specific period of time following which a fresh application must be made if the deputyship is to continue.
additional ongoing charges for a professional deputy
If a professional deputy is appointed the following additional costs will apply (these figures do not include the annual fee for the security bond):
* Annual management fee where the court appoints a professional deputy for property and financial affairs, payable on the anniversary of the court order – for the first year £1,800 (including VAT); for the second and subsequent years £1,440 (including VAT)
* Preparation and lodgement of the annual report or annual account to the Public Guardian – £282 (including VAT)
* Preparation of an HMRC income tax return – £282 (including VAT)
summary of deputyship costs:
Figures below are based on the above plus a ‘guestimate’ of the cost of the security bond which depends on the level set by the Court and the financial standing of the Deputy.
Estimated first year costs including all initial court and legal fees (as at January 2015) for assets of £400,000 controlled by a lay deputy: £2,610.00.
Estimated total annual fees (as at January 2015), for year two and onwards for assets of £400,000 controlled by a lay deputy needing minimal supervision: £835.00.
Estimated first year costs including all initial court and legal fees (as at January 2015) for assets of £400,000 controlled by a professional deputy: £4,974.00.
Estimated total annual fees (as at January 2015), for year two and onwards for assets of £400,000 controlled by a professional deputy: £2,839.00.
There is a more detailed breakdown of the costs on the downloadable file we provide in the opening paragraph on Deputyships on the Lasting Power of Attorney page.