HM Insights

The Shetland blog: What can you do when an adult loses capacity to make decisions?

Jenni Gear, a Family Law solicitor based in Harper Macleod's Lerwick office, and private client Partner Julie Doncaster consider what relatives can do when someone loses capacity to make their own decisions.

If someone has lost capacity to make decisions for themselves, what can relatives do to manage that person's financial affairs and make decisions regarding their welfare?

Shetland Blog Image Harper Macleod Lerwick Solicitor Estate Agents Lawyer

Specific Orders

In the absence of a Power of Attorney, and depending on the level of assistance needed, there are various powers that can be obtained so that a relative or other appropriate person can act on behalf of the person who has lost capacity (known as the "adult").

The relevant law is the Adults with Incapacity (Scotland) Act 2007 which states that whatever is put in place for the adult should be the least restrictive option.
If all that is required is to pay the adult's living expenses, an access to funds arrangement may be appropriate. This means that whoever is appointed will be able to access bank accounts (providing they are in the adult's name only) and for example pay day-to-day living costs, debts or buy specific items required by the adult.
If a one-off action is required e.g. the adult's house needs to be sold, then an Intervention Order may be appropriate. This order gives authority for the specific act to be completed, and must be obtained through the local Sheriff Court.

Guardianships

If ongoing management of the adult's affairs is required, then you will require a Guardianship Order. This order is most suitable if the adult has long term needs and will appoint a Guardian to look after their affairs. A Guardianship Order can appoint someone to be responsible for both financial and welfare matters. Its powers can include the power to sell properties, manage bank accounts, sell investments and also make decisions regarding care.

To obtain a Guardianship Order an application must be made to the adult's local sheriff court. Anyone with an interest in the adult can apply. The application has to be accompanied by two medical reports and, if appropriate, a report from a mental health officer. The application requires to be intimated on all people relevant to the adult e.g. relatives or the adult's carer. Generally, the application would also have to be intimated on the adult themselves as well. If an order is granted, it must be registered with the Office of the Public Guardian.

It's normal for orders to be granted for three years however it may be granted for a longer period or for the lifetime of the adult if the incapacity is lifelong.

If someone you know may benefit from assistance as detailed above, it is recommended you take legal advice as soon as possible. Guardianship Orders can be expensive although Legal Aid may be available.

However, to ensure one of the above orders are not required, it is best to have Power of Attorney signed to cover the possibility of capacity being lost in the future.

Power of Attorney

Most Powers of Attorney (POA) usually combine both financial and welfare powers and some also contain an advanced directive, (also known as a Living Will).

To ensure the POA can operate even if you lose capacity you must have a Continuing POA (in England this is called a Lasting POA).

Making a Power of Attorney is a very straightforward process but it is imperative to put this in place when you have capacity to understand the terms. That said, it may be possible to complete a POA after a diagnosis of early stage dementia, particularly if the Granter can still understand the document and clearly wishes the appointed attorney/s to act. 

Continuing Powers of Attorney must be signed in the presence of a solicitor or a doctor who will certify that you had capacity to complete the Power of Attorney at that time.
Once signed, your solictor will register the new POA with the Office of the Public Guardian which carries a fee of £75.

Thereafter, most banks and other institutions will require the appointed attorney to provide the Registered Deed and identification documents.

The advantages of choosing to put a POA in place as opposed to the court process of the Guardianship Order are twofold:

  1. Control
    You chose who you want to act and pick the Powers that they should have and at what point they should kick in. When the court appoints a Guardian, all of this will be decided for you. In some cases, the local authority will end up being appointed and an Adult may be placed in a home at a point where an appointed POA might have made a different call.
  2. Cost and continued reporting
    The Guardianship process can cost many thousands of pounds and there will be ongoing costs when the Guardianship comes up for renewal. Further, the Guardian will be required to submit annual accounts and management plan. There will also be an annual compulsory insurance bond known as Bond of Caution, the price of which will increase with the size of the estate. This can all be rather onerous on the Guardian.

A POA will usually cost no more than a couple of hundred pounds and there will be no ongoing costs or administrative requirements. Your attorney will have much greater flexibility and autonomy to deal with your affairs as you would wish them to.
As solicitors being involved in both the POA and Guardianship process, it is always very sad to find a person has missed an opportunity to choose the more simple and cost effective POA route.

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