Money and legal matters 4 - Simple ways to help with financial matters
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Introduction
Helping someone with no continuing power of attorney
Accessing funds or financial guardianship
Using a continuing power of attorney
Summary
This section is concerned with people who have moderate to severe dementia, and is for carers, relatives or friends who are helping with financial matters.
There is a range of ways that you can help someone who can no longer manage money.
Money can cause problems for both the carer and the person with dementia. As the illness progresses the person will become less able to cope with money. He or she may forget to pay bills, pay them twice, give away money or lose it. Even in the early stages, many people with dementia find handling cash very difficult - for example, knowing how much coins and notes are worth and counting change.
For many people, especially if they always handled finances, this can be upsetting. In time someone else may have to take over more of these tasks. Some quite simple changes can make it easier for bills to be paid or pensions collected.
Helping someone with no continuing power of attorney
If no-one holds continuing power of attorney for the person for their financial affairs, and there is no guardian with financial powers, there are three simple ways to help him or her with money. These may be all you need. They are: becoming an appointee to collect pensions and benefits, continuing to operate a joint account and making arrangements to access funds held in the person’s sole name in bank or building society accounts.
Payment of pensions and benefits
If the person is unable to look after his or her own affairs you can ask the Department for Work and Pensions (DWP) to appoint you (or someone else) to act on his or her behalf as an appointee. You can get an application form to become an appointee from a local Department for Work and Pensions office. You may be asked to provide medical evidence of the person’s incapacity and interviewed about your suitability to become an appointee.
As appointee you can apply for benefits and collect them on behalf of someone who is mentally incapacitated, but you cannot run the person’s bank account. You must tell the DWP of any change in the person’s circumstances.
Some other organisations, such as benevolent societies and certain employers, also run an appointee system for payments such as pensions. They may check to make sure that you are a suitable person.
If it is not convenient for you to become an appointee, contact the DWP. They can organise for an organisation like the social work department to become a ‘corporate appointee’.
If the DWP believe that an adult is not able to manage his or her benefits they may suspend payment of benefit until someone can be made appointee. They can do this even if the person disagrees.
If an appointee does not act in the person’s best interests, anyone can ask the DWP to investigate. If appropriate they will cancel the appointeeship.
If you are an appointee for someone who dies, you need to reapply for appointee status in order to continue dealing with any claim for benefit that was made prior his or her death. An executor of a will can also pursue an outstanding claim or appeal on behalf of the deceased.
Joint accounts
Many people have joint accounts where only one signature is needed on cheques (an ‘either or survivor clause’). If one partner becomes mentally incapacitated the other can continue to operate the account as before (unless you opted out of the scheme when the account was set up, or you are prevented by a court order from operating the account).
It is best to tell the bank or building society of the person’s incapacity. You may need to discuss safeguards, for example if there is a risk that someone else might persuade the person with dementia to sign large cheques.
Usually each person named on a joint account is taxed on half the interest from the account. However, if the money in the account all belongs to the person with dementia, get an ‘allocation of interest’ form from the Inland Revenue. They can then allocate all the interest to the person. If the person is not liable to pay tax at all you can get a form from the bank or building society for payment of the interest without deduction of tax.
Authority to access the person’s funds
If the person with dementia has bank or building society accounts in his or her sole name, you can apply to the Public Guardian (see Further Help) to access the funds. (This is also known as ‘authority to intromit with funds’ or becoming the person’s ‘withdrawer’). This part of the Adults with Incapacity Act was designed to be used by a carer, relative or friend, but others with a genuine interest can apply (but not local authority staff such as social workers). Recent changes to the Adults with Incapacity Act now allow organisations as well as individuals to apply to access funds and it is now possible to make joint applications and to have joint withdrawers and reserve withdrawers to act on behalf of the main withdrawer if necessary.
You can only access someone’s funds in this way if there is no-one else, such as an attorney or guardian, who has the power to do it.
Applying to access funds
Ask the Public Guardian for an application form and the guidance notes. You will have to list what you will use the money for and approximately how much you need for each item. For example, you may need to pay the person’s bills like gas, electricity or council tax, and buy food for him or her. You should also put in costs for items such as a holiday for the person and clothes. If the adult has any arrears, for example for care costs or bills which have not been paid, then you can ask for a lump sum initially to clear these. Remember to take account of any bills which will arrive during the time it takes to make the application.
Your authority will normally last for three years before you have to renew it, so think ahead and include an allowance for inflation in the amounts you fill in on the form. Don’t worry if you make a slight overestimation – the money still belongs to the person with dementia and is still held in their bank account. The application fee is currently £60.
You also need to give:
- details of the account belonging to the person with dementia that you want to access, known as the specified account
- an undertaking to open a new account to manage the money, known as the designated account – this should be an account that will be convenient for you to use, and does not have to be at the same bank
- details of any direct debits and standing orders you want to continue to come from the specified account, so that you don’t have to set them up again on the new designated account
- details of the primary carer and nearest relative, if it isn’t you and if you know who they are.
Get the form countersigned by a person who has known you for at least one year and who knows you well enough to comment on the suitability of both you and the application to access funds. The countersignatory does not need to know the person with dementia. There used to be a prescribed list of professional people eligible to countersign such as a nurse or a doctor (but not the one who signed the medical certificate), a teacher or a minister but this is no longer the case. If in doubt check with the Public Guardian’s office.
The Public Guardian will normally notify the person with dementia, the nearest relative and primary carer and anyone else he or she thinks has an interest. However, the person with dementia need not be notified if two doctors, one with specialist knowledge, advise that this information would be a serious risk to his or her health. This would only happen in exceptionally rare circumstances.
Any of these people can object, so it is best to discuss your plans first. If the Public Guardian proposes for any reason to refuse the application, you will get a chance to be heard, and if that is not successful you can appeal to the sheriff. The Public Guardian can tell you how to go about this.
If the form is properly completed, your application should take about four weeks; but it can take longer if the Public Guardian’s office need to send it back to you for more information. If you are unsure about anything on the form, the Public Guardian’s office can help you fill it in correctly.
You cannot be paid for accessing funds, but you can claim reasonable expenses such as the fee for registration or the cost of the medical certificate from the person with dementia’s funds if you specify this in the application.
Withdrawing and using funds
If your application is successful, the Public Guardian will issue you a certificate. The certificate is usually valid for three years; after this you must reapply. You will need this certificate to access the person’s account and to open the designated account, which will be in your name on behalf of the person.
As the person named in the certificate you are known as the ‘withdrawer’, and you cannot make arrangements for anyone else to access the accounts, unless there are joint withdrawers or a reserve withdrawer.
The Scottish Executive issue a code of practice which will give you guidance on becoming a withdrawer (see Further reading). The Public Guardian’s Office also provide information leaflets.
You may only use the designated account for the purposes in your application, and not for any other transactions involving the person’s money or your own. The specified account can continue to be used for existing direct debits and standing orders if you ask for this on your application.
Being withdrawer for someone is a position of trust. You have a legal duty to act with due skill and care, and to act reasonably and in good faith. If you do, you are not personally liable for any financial loss to the granter. But if you abuse your position, you are legally liable to make good any losses. You are not allowed to overdraw on either of the accounts, and the bank should not allow it. If you do, you are personally liable for the interest and charges on the person’s account or the designated account.
You must follow the Act’s principles and the Code of Practice, including taking the person with dementia’s wishes into account. You must keep records of what you spend, which you may have to show to the Public Guardian, including bank statements and receipts for single items costing £20 or more. You must keep the person’s affairs confidential and notify the Public Guardian of any change in details, such as changes of address.
It is good practice to use direct debits and standing orders for regular payments. If there are shared expenses, for example a shared electricity bill, divide these reasonably. You can refuse to pay anything you think is unreasonable.
If an unforeseen major expense comes up, for example an expensive trip to see distant relatives, you cannot normally pay if it was not included in the original application. However, you can apply to vary the estimates in your original application for example if the person with dementia's circumstances change or there is an unexpected expense. You should contact the Office of the Public Guardian for advice. You may need to reapply to access funds at a higher level.
Your authority to access funds will probably end if there is an attorney, guardian or intervention order covering the same funds. Your authority will end if the person dies or recovers the ability to look after his or her money. Tell the Public Guardian if you want to give up the responsibility. Another relative or friend could apply instead.
Accessing funds or financial guardianship?
You may not know the full extent of the assets of the person with dementia and whether the work and expense of applying for financial guardianship is necessary. See Guardianship – for continuing help. It is difficult to confirm the details of accounts with the financial institutions concerned as they are bound in law to keep such information confidential.
If in doubt, it is usually best to apply to access funds in the first instance since this is the least restrictive intervention necessary and costs only £60 to register. If you later find that the person’s assets are more extensive and need considerably more management, then an application for financial guardianship can be made.
If you do not know anything about the person with dementia's assets, you can apply to the Office of the Public Guardian to ask for information about the person's bank or building society accounts. You can ask for information about where accounts are held, the account details, how much money is in any account, and any other information you need to allow you to decide if the access to funds scheme is the best option for you to use to help the person with dementia.
Using a continuing power of attorney
The person may have signed a continuing power of attorney earlier in the illness, naming someone to look after his or her financial and property affairs. If it is a continuing power of attorney signed after 2 April 2001, it must be registered with the Public Guardian and can then be used. If the power of attorney was signed before 2 April 2001 but after 1 January 1991 it does not need to be registered and will remain valid when the granter becomes mentally incapacitated (unless it was deliberately set up not to do so). Powers signed before January 1991 were not continuing. The position with these is not clear, but in practice they may continue in use unless challenged. Check with a solicitor if there are any difficulties.
If you are someone’s attorney, you will need a copy of the document issued by the Public Guardian, who will also provide a certificate of registration. To use the power of attorney, you should show these to whoever you are dealing with; for example, the bank manager.
Registering a continuing power of attorney (made after April 2001)
In order to operate a continuing power of attorney which was made after 2 April 2001, it must be registered with the Public Guardian (see Further help). The fee is currently £60. (Often this is done just after it is drawn up.) If the power of attorney specifies that a particular event must happen before it can be registered, such as mental incapacity relating to property and financial affairs, you must provide evidence of this (for example medical certificates).
The person who gave you the power of attorney is known as the granter. The Public Guardian will check that you are willing to act as attorney, and will notify the granter and anyone else specified. All being well, the Public Guardian will then authenticate a copy of the document. You will need this in order to use the power of attorney. You can get extra copies for a fee of £10 plus £1 per page of the document from the Public Guardian. The Public Guardian will also provide you with information and advice on how to operate the power of attorney and your rôle as attorney.
A position of trust
Being attorney for someone is a position of trust. You have a legal duty to act with due skill and care, and to act reasonably and in good faith. If you do, you are not personally liable for any financial loss to the granter. But if you abuse your position, you are legally liable to make good any losses.
Your duties as attorney include:
- following the Act’s principles (see Principles of the Adults with Incapacity Act in chapter one) and the Code of Practice (see Further reading)
- consulting with the granter and others on actions you propose to take
- keeping records
- notifying the Public Guardian of any change in details, such as a change of address for you or the granter
- keeping the granter’s affairs confidential
- keeping the granter’s affairs separate from your own.
Records
The records you keep should include receipts, (for example on expenditures of single items of £50 or more), instructions to banks, correspondence and accounts. You should also keep contact details for the granter, the person’s nearest relative, primary carer, welfare attorney or guardian if there is one and any significant others (because you have a duty to consult them). You also need details for any joint or substitute attorney, notes of any discussions of the person’s expressed wishes, an up-to-date list of his or her assets and where relevant papers are kept.
Powers of attorney made before April 2001
The principles of the Adults with Incapacity Act also apply to operating a power of attorney made before the Act came into force on 2 April 2001 (See Principles of the Adults with Incapacity Act, chapter one). However, these older powers of attorney do not have to be registered with the Public Guardian, so there are fewer safeguards. It is good practice to keep records, but this is not a legal duty. However, an attorney who does not carry out his or her duties properly can still be placed under the supervision of the Public Guardian.
If you are worried about losing the document, a solicitor may be able to certify a photocopy as a true copy that you can use. If the power of attorney was registered with the Registers of Scotland (not the same as registering new powers of attorney with the Public Guardian), you can ask the solicitor to obtain an extract copy, or write to the Keeper, Registers of Scotland, Meadowbank House, 153 London Road, Edinburgh EH8 7AU, 0131-659 6111 (from £11).
Information and consultation
It is very important that you have as much information as possible about the person with dementia’s current financial situation and his or her wishes, likes and dislikes, past and present. When the granter becomes incapacitated and you take on your duties as attorney, talk to him or her and to his or her nearest relative and primary carer and anyone else involved, such as the person’s welfare attorney and other relatives and friends involved in his or her care. You will need to consult them about the decisions you take. It is important that everyone understands your rôle as continuing attorney and how you will carry it out and consult (for example, regular meetings of those involved might be very useful).
The Scottish Executive has produced a code of practice for attorneys which you should use to guide you (see Further reading). If you need advice on using your financial powers, the Public Guardian (see Further help) can advise you.
If you have not previously been closely involved in the person’s financial affairs, you should review the current situation and consider whether anything needs to be improved. For example, should the weekly allowance for heating and food be increased, is the house in need of care and repair (given that the person may have been neglecting him or herself and their home for some time), what savings and investments are there and are they earning good interest rates, what income and outgoings does he or she have and is he or she receiving all benefit entitlements? The code of practice will give you more guidance on what to consider.
When a power of attorney ends
An attorney can refuse to start operating his or her powers, so it important that the granter gets the attorney’s agreement when the document is drawn up. Once it is being used, a power of attorney will end if:
- the granter cancels it whilst still capable, recovers or dies
- the attorney resigns (if the power of attorney was made after 2 April 2001, you must give 28 days’ notice to the Public Guardian, unless there is a joint or substitute attorney willing to take over)
- the attorney (or the granter) becomes bankrupt (for continuing powers)
- the attorney dies
- the attorney is married to the granter and they separate or divorce (unless the power of attorney says otherwise)
- the court appoints a guardian with relevant powers, to take over the granter’s affairs.
Safeguards
The Public Guardian has a duty to investigate any legitimate complaint (from anyone) about how an attorney is carrying out his or her duties. If you are worried, you can call the Public Guardian’s office (see Further help) to discuss the issue. For a complaint to be investigated you will need to submit it in writing. If necessary the case can be referred to the sheriff, who can make the attorney submit accounts for audit. The sheriff may order that the attorney is supervised by the Public Guardian, or take away some or all of the attorney’s powers.
Anyone with an interest has the right to apply directly to the Sheriff to direct the attorney to do something or not do something, or to remove the attorney or place him or her under supervision, but there are costs involved in this option.
There is a range of ways to help someone who can no longer manage money.
You can ask the Department for Work and Pensions to make you an appointee, to handle the person’s benefits.
If you have a joint account with the person, in most cases you can still use it even if he or she is incapacitated.
You can apply to the Public Guardian to access the funds held in an account in the person’s sole name.
A continuing Power of Attorney signed after 2 April 2001 must be registered with the Public Guardian for it to be used to manage the person’s finances.
You must follow the Act’s principles if you are an attorney or have authority to access funds.
The Public Guardian will investigate complaints about continuing attorneys.
Powers of attorney made before April 2001 can still be used and don’t have to be registered.
Dementia - Money and Legal Matters : index page
Useful links related to this chapter:
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Office of the Public Guardian
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