Stacey Bryant, Partner and Head of Court of Protection at Brain Injury Group member firm Enable Law talks us through the issue of family/friends receiving gratuitous care payments.
What is family/gratuitous care?
It is very common for family members and friends to provide informal care for a loved one. The type and extent of the care provided can vary significantly depending on the needs of the person receiving the care. For some that may be periodic support with household bills and shopping. For others, it could be full-time regular care including an element of nursing and therapy.
In some cases that care is provided without expectation of any payment on the part of the carer. In other cases, a payment is very important to support the carer who may have given up paid work to look after a loved one.
In these situations, the family member is not an employee so is not paid a wage and would not, therefore, be entitled to any of the rights/benefits of an employee such as a pension, National Insurance Contributions, sick pay etc.
Can a Deputy make family/gratuitous care payments?
Where you are appointed as a Deputy for a person who lacks capacity to make decisions concerning their own finances, it is important to consider what authority you may have to make a family care payment and what factors you need to consider when deciding what amount is reasonable.
An Order appointing someone as Deputy will confirm the Deputy has authority to make decisions that the incapacitated person can’t make themselves in relation to their property and affairs. It will require the Deputy to apply the principles set out in section 1 of the Mental Capacity Act 2005 (the Act) and also have regard to the guidance in the accompanying Code of Practice. It is important any Deputy carefully reads the Order and understands the extent of their authority and any restrictions imposed by the Court limiting that authority. For example, an Order may restrict the annual expenditure permitted without further Court approval or it may also prohibit the sale or purchase of property.
Section 4 of the Act confirms a best interests decision can be made for someone who lacks the capacity to make that decision themselves. The Act also sets out what steps must be taken and factors considered when making a best interests decision. This includes:
- Taking reasonable steps to permit and encourage the person who lacks capacity to make that decision themselves or be involved in the decision-making where possible. Being appointed as a Deputy does not mean the incapacitated person should no longer be involved or consulted.
- Where it is possible to, take steps to understand:
- The past and present wishes and feelings of the person who lacks capacity,
- Their beliefs and values likely to influence this decision, and
- Other factors relevant to the decision.
- Consulting with other people relevant to making this decision – other family members for example.
This essentially means a Deputy can make a decision to pay family members/friends for the informal care they provide, if they consider it is in the best interests of the person who needs the care and who lacks the capacity to make that decision themselves.
Is the position the same for lay and professional Deputies?
A professional Deputy is someone who is paid to act as Deputy. They will have authority to make family care payments under the Order appointing them. They will still need to comply with the terms of that Order and to apply the principles of the Act when making a best interests decision for their client. That decision will need to be properly recorded. An application can be made to the Court seeking guidance but this isn’t compulsory unless directed by the Court or the Public Guardian.
Where there is a lay Deputy appointed (a family member for example), the position becomes a little more complicated.
Section 19(6) of the Act confirms a Deputy is acting as an ‘agent’ of the incapacitated person when they are making decisions for them. This essentially means a Deputy will have many legal duties they need to comply with. One of those duties is not to take advantage of their position as Deputy or to put themselves in a position where their duty as Deputy and the decision they need to take, might conflict with their own personal position for example.
What does this mean?
If the lay Deputy is also the person providing the family care or is closely connected to them (a spouse for example), they would effectively be making a decision as a Deputy to pay themselves or their spouse as a family carer. This places them in a conflict of interest position where it may be difficult for them to objectively assess what is in the best interests of their loved one who lacks capacity. In this scenario, the lay Deputy is expected to make an application to the Court to seek prior approval of any family care payments.
How do I know what is a reasonable amount to pay?
The Public Guardian has issued a very helpful practice note (SD14 – www.gov.uk/government/publications/public-guardian-practice-note-family-care-payments/pn2-family-care-payments-web-version) clearly setting out the approach to be followed when considering whether it is in the best interests of an incapacitated person to make a family care payment on their behalf, and how to approach the calculation of that payment.
The factors to consider when making that best interests decision include:
- The care must be reasonably required to meet the individuals needs and must be actually provided.
- It must be affordable taking into consideration how much money they have, how long it needs to last, what their other expenditure is etc.
- The payment must properly reflect the care provided. It shouldn’t be calculated (save in exceptional circumstances) by reference to any loss of earnings the carer has suffered for example.
- The family care payment should effectively be cheaper than the cost of commercial/professional/paid care.
- Payments should take in to account the overall family situation and any other payments being made.
- Payments should be agreed with the carer and other family members if possible to avoid conflicts.
The Practice Note also sets out 3 possible approaches to calculating how much the care payment should be. Those approaches are:
- Where the incapacitated person has sufficient assets to meet all of their needs for their lifetime, the Deputy can ask the person who is providing the care, how much they need. The Deputy would then need to be satisfied that payment was reasonable in the context of the care provided and was affordable over the lifetime of the person receiving the care.
- The family care payment can be calculated by reference to the cost of providing that care professionally and then reducing that amount by 20%.
- Where the person receiving the care does not have sufficient funds to make a payment calculated by reference to either of the above 2 approaches, the Deputy will need to consider what is affordable when assessing how much money may be needed to cover other items of expenditure (household bills etc).
The guidance is therefore drafted very widely providing the Deputy and the Court with the discretion to ensure any payments made are calculated to reflect the needs of the individual and their family.
There are no particular rules as to how frequent these payments can be. In some cases they are monthly (similar to a wage) to enable the carer to meet their own financial needs. In other cases the payment may be periodic, for example to cover situations where the care is respite or to support with holidays or infrequent activities.
Any Deputy appointed will need to keep a clear record of all payments they make and also regularly review those payments to ensure they continue to reflect the needs of the incapacitated person and they are still in their best interests as circumstances can change, for example; the living arrangements or amount of care needed.
What about Tax?
One of the reasons why family care payments might be calculated by reference to the cost of professional care and then applying a 20% reduction, is to reflect the fact they are paid net of tax and National Insurance.
Whilst HM Revenue and Customs will generally view these payments as being exempt from Tax and National Insurance as they are voluntary, it is always advisable to seek guidance on this.
Enable Law has a specialist Court of Protection team supporting clients (adults and children) who lack capacity to make decisions themselves. We are appointed by the Court as Deputy and also support family members in their role as lay Deputy.
Written by Stacey Bryant of Enable Law
Partner at Enable Law and leader of the mental capacity team, Stacey is dedicated to making sure clients’ best interests are safeguarded and has been trusted with protecting the financial welfare of a number of brain-injured clients.
About Enable Law
Enable Law is a specialist medical law and personal injury practice with offices across the South West, South Coast and London.
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