When a loved one becomes incapable of making decisions for themselves, without a power of attorney it becomes necessary to apply for a court of protection order. This can be costly, time consuming and very stressful.
Recently the Daily Mail ran an article about a real-life situation entitled “When Dad died, Mum’s dementia triggered a financial nightmare” written by Samantha Partington.
This article highlighted the very real difficulties families can find themselves facing when illness strikes and when you’ve not taken action to get everything organised in advance.
A summary of the situation
Sam’s Mum was diagnosed with dementia in February 2016 and she needed full-time care in a nursing home. Her devoted husband (Sam’s Dad), died 7 months later of a heart attack.
Dad had not made a will which meant that everything was left to Mum – the house, all savings/investments and an equity release mortgage.
Mum was incapable of looking after herself never mind the finances, but as there was no Power of Attorney, Sam and her brother Michael could not help or act for her.
Soon the bills started mounting up – they couldn’t sell the house as they had no authority to do so but the council tax and bills had to be paid. The joint bank account was frozen, and the equity release company asked for their money back as the house was empty.
They couldn’t do anything without applying to the Office of the Public Guardian for a court protection order. This would give Sam and Michael some control, as they would become deputies for their mother and be able to make some decisions.
A court of protection order sets out what the deputies have permission to make decisions about and demands that they report back regularly and gain permission before acting – event then, the permissions are limited.
To become a deputy they had to complete some very complex forms detailing their own financial situations, declaring debts and providing details of other family members so they could also be informed.
It took over 7 months for the order to be granted during which time Mum had to be subjected to an interview and cognitive tests to confirm that she had lost mental capacity. Sam and Michael were not allowed to be with her during this process – all very upsetting.
Sam had to also apply to become an appointed person with the Department for Work and Pensions so she could establish her Mum’s income for the court. This again involved a lengthy interview to ascertain whether she was trustworthy.
The court of protection case manager wanted to know what the intention was regarding Mum and Dad’s house. Now that Mum owned the house outright, she was no longer entitled to any help with her care home fees.
So, the family home that Sam or Michael wanted to keep, had to be sold and they only had 3 weeks in which to do this.
The fees for the application, the assessment and the ongoing supervision fees to the Office of the Public Guardian run into hundreds of pounds each year and deputies have to take out compulsory insurance to protect the estate against any negligence.
The deputies are also required to complete annual accounts detailing money going in and out of Mum’s bank accounts, – these must balance to the penny. Any expenses e.g. taxis to take Mum out, have to be justified with records and receipts – looking after Mum feels like running a small business.
Some solutions
What a horrible situation for Sam and Michael to find themselves in. Their parents would not have wanted them to have so many problems, and had they made some simple decisions earlier, when they were fit and well, life would have been so much easier.
Two simple actions would have saved Sam and Michael a lot of heartache:
- Make a will and keep it up to date. A will simply says who you want your assets to go to when you die. We ARE all going to die and, in our experience, making a Will doesn’t accelerate the process! Whether you are 20 or 90 (or any age in between) it is useful for everyone to know your intentions regarding the future ownership of your assets – and to keep this up to date – especially with significant health changes.
- Set up Powers of Attorney. This is where you choose someone you trust to act on your behalf if you are unable to do so for yourself. There are two types of power – one to deal with your finances and one to deal with your health and care. This can be set up online or by a solicitor.
Had Mum and Dad done this in this case, Dad might have left his half of the house to Sam and Michael thus reducing Mum’s assets that could be assessed for care costs. Sam and Michael would have been able to make decisions on behalf of Mum, releasing funds to her to meet her needs without having to get court permission for every purchase.
At Magenta, we talk about these important documents every year and recommend that all our clients have these two key documents. Alongside this, we encourage our clients to talk about money, inheritance, healthcare and end of life preferences and how things are to be managed on their death with their family – as this will prevent heartache and stress for everyone involved.
Do please call for a friendly chat if you think these problems could arise and apply to your family.
If you are interested, you can read the whole story online by clicking here.