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A brain injured man in a wheelchair and his partner thoughtfully look out across a forest lake as if they were thinking of Statutory wills and gifts

Applications to the Court of Protection for the approval of Statutory Wills are very low and it is concerning that those without capacity perhaps do not have the representation to assist them and their estates are left to the mercy of the laws relating to intestacy.

The statistics published by the Ministry of Justice show a steady flow of just over 500 applications a year for the joint category of Statutory Wills and applications relating to lifetime transfers of assets. Both applications relate to an agreed transfer of a person’s (‘P’s) assets and the Court of Protection deploys a similar balance sheet approach for the decision making process in each i.e. a list of the pro’s and cons.

Applications to approve Statutory Wills

A Statutory Will is a will made through the Court of Protection under the Mental Capacity Act 2005 for someone who lacks the capacity to make a will themselves. The process can also be used to alter or amend a current will where there has been a change in circumstances. The will may have been made before compensation was received or beneficiaries under a previous will may have died or become estranged.

An application for the approval of a will can be made for anyone over 18, with contemporaneous medical evidence specifically assessing their ability to make a will and assets to dispose of in the UK. The contents of the will need to be shown to be in their best interests.

What is considered to be in best interests?

The Mental Capacity Act requires that any decision made for ‘P’ must be made in his best interest. A series of cases have passed through the court culminating in NT v FS and ORS (2013) EWHC 684 and the formula for dealing with statutory wills is well established. The best interest test is a subjective test and not one of substituted judgement, it requires consideration of all the relevant circumstances to determine what will be in the best interest of ‘P’. Amongst the factors considered are;

  • past and present wishes and feelings
  • beliefs and values
  • family relationships
  • other factors that the person would have deemed important
  • taking into account anyone that cares or cared for them
  • views of the appointed Deputy

The decision is essentially a value judgement by the Court. The prominence of each of the factors is weighted differently from case to case depending on the specific circumstances and the evidence put forward.

What is the application process for a statutory will?

Any application to the Court for the approval of a statutory will would require all those with an interest to be notified unless there were compelling reasons for the Court to agree to dispense with their notification. The Official Solicitor is also joined as a respondent to represent the wishes of ‘P’ independently. The decision is then only made after considering representations from each party and considering evidence of financial situation and family circumstances.

Where there is evidence to suggest ‘P’ is critically ill and has a limited life expectancy the Court will proceed quickly to approve a will provided the delay is not that of the applicant and as long as it would not be unduly prejudicial to any interested party.

Applications for Lifetime Transfers

A Deputy or an Attorney under a Lasting Power of Attorney or Enduring Power of Attorney can bring an application to the Court of Protection for the approval of a ‘gift’ or authorised transfer of assets where it is in the best interests of ‘P.’ The Office of the Public Guardian has a detailed practice note on when this might be considered appropriate – www.gov.uk/government/publications/public-guardian-practice-note-gifts.

Some gifts of a smaller nature are permitted by Attorneys and Deputies under S12 Mental Capacity Act 2005. Customary gifts amongst family and friends i.e. birthday, Christmas and gifts are permitted provided the amounts are proportionate to the size of the estate.

The law relating to gifting is set out in S16 of the Mental Capacity Act 2005 and more specifically in S18 (1) (b). The act of gifting is required to be in the best interests of ‘P’ which in itself requires an assessment of all the relevant surrounding circumstances.

It is easy to be caught out by the gifting rules as you might not necessarily think of some transfers as gifts. Transfers to be wary of are;

  • interest free loans, as they essentially gift the interest
  • selling a property at an undervalue
  • making a payment to a family member for care they have provided
  • providing for the needs of those connected to the person
  • transferring funds to yourself
  • varying ‘P’s’ entitlement by transferring assets into a trust or by a deed of variation

If you have made unauthorised gifts you are best taking legal advice and initiating a retrospective approval application to the Court. The making of unauthorised gifts can ultimately lead to removal as an Attorney or Deputy and potentially a referral to the police.

In considering what is in the best interests of ‘P’ the Court will follow a similar balance sheet approach as for the statutory will applications but will need to consider expert evidence relating to care needs, life expectancy and financial position to ensure that any agreed gift leaves ‘P’ with enough assets to maintain themselves for the remainder of their lifetime.

The Court will approve applications for many things for example retrospective care payments to family members, for the transfer of assets from a directors account of a family business, the release of equity from property to pay for care fees and gifts of assets to minimise inheritance tax (IHT).

Although IHT planning gift applications have been successfully approved by the Court the recent decision, in the case of FL v MJL [2019] EWCOP31, found that there was not sufficient evidence to show that it would be in ‘P’s best interest to gift large amounts of his estate to minimise inheritance tax where he had been indifferent to such planning previously. There is therefore a suggestion that inheritance tax planning applications will need to evidentially show an engagement with accountants and a pre capacity loss interest in tax planning to succeed.

This article was written by Eve Carter of Hudgell Solicitors

Eve is National Head of Court of Protection at Brain Injury Group member firm Hudgell Solicitors.
Hudgell Solicitors serve clients nationwide and have offices in Hull, London and Leeds.

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