IT COULD HAPPEN TO YOU (PART 1)

The headline refers to the fact that a significant percentage of the adult population of Scotland will at some point in their lives lose their legal capacity. Legal capacity is the legal power individuals have to manage their own financial business and personal lives. Every adult over 16 years of age normally has full legal capacity. Legal capacity can be restricted or lost and legal "incapacity" arises. Incapacity may occur temporarily, for example, because of temporary illness or permanently, for example, as a result of incurable illness, age or mental infirmity.

For many years before the Scottish Parliament was established, concerns had been expressed that the existing Scots law dealing with adults with legal incapacity was antiquated, inadequate and inflexible.

Under the pre-existing law there were generally two options.

Firstly, an individual "the Grantor" could grant a Power of Attorney. A Power of Attorney appoints a named individual or individuals to exercise various "powers" to deal with the financial business and generally manage the affairs of the Grantor. A Power of Attorney has the advantage of being cheap to set up and flexible because the Grantor can specify the exact powers the Attorney can exercise.

The Grantor can also cancel a Power of Attorney while the Grantor retains full legal capacity. Additionally a Power of Attorney does not remove the capacity of the Grantor to deal with his or her financial or personal business.

The main disadvantage with Powers of Attorney was a lack of legal and outside control over what an Attorney could do with the powers granted. Unfortunately there were a number of cases where Attorneys abused their powers and were accountable to no one until it was too late. There was no requirement for the existence of Powers of Attorney to be registered. If the Grantor was incapacitated the Attorney could do what they wished with the Powers without having to refer back to the Grantor. In addition, there were some practical difficulties operating a Power of Attorney where powers to deal with personal business of the Grantor were required, e.g., consent to medical treatment.

The second common legal option for dealing with an adult with incapacity was to seek the appointment of a Curator Bonis. A Curator Bonis is a named individual appointed by the court to manage only the financial business of an incapacitated individual whether an adult or a child. This procedure was the only legal option if an adult became incapacitated and had not previously granted a Power of Attorney. A government official called the Accountant of Court tightly supervised the actions of a Curator Bonis. The disadvantages of a Curator Bonis appointment were many. The procedures to set up a Curator Bonis appointment, known as a Curatory, were relatively complex and could be expensive in relation to the assets to be managed. In addition the Curator Bonis had no duty to take into account the general welfare of the incapacitated adult or the wishes of that adult.

Scots Law in this area has now been changed with the passing of the Adults with Incapacity (Scotland) Act 2000 in the Scottish Parliament.

This Act is divided into a number of Parts and this article focuses on the Parts that came into force at the beginning of April 2001.

Part 1 sets up a basic framework dealing with the financial and personal business of incapacitated adults. The original Accountant of Court's Office has been converted to the Public Guardian's Office. The Public Guardian will have the function of monitoring and controlling certain dealings with financial and personal affairs of adults with incapacity and will provide a much needed outside element of monitoring.

In addition, in this part of the Act various principles are laid down to make it clear that the interests and wishes of the adult who has lost capacity are paramount. In particular all decisions made for the adult must benefit the adult, must take account of the adult's wishes so far as the adult can still express them, or expressed them in the past, restrict the adult's personal freedom as little as possible and encourage the adult to use existing skills or develop new skills. The aim is to ensure that an adult, even if they lose legal capacity, still retains involvement and, so far as possible, retains a say in any financial and other decisions made about them.

The first practical Part of the Act to come into force is Part 2 concerning Powers of Attorney. Any Power of Attorney granted after 1st April 2001, if it is to be used to later deal with an incapacitated adult, must be registered with the Public Guardian's Office.

In addition, there are new procedures to cover the creation of such a Power of Attorney. In particular a Certificate must be included in the Power of Attorney to confirm that the Power was granted freely, by an individual who understood what they were granting and was not granted under any force or duress. The Power of Attorney must also make it clear that it is to continue after the adult becomes incapacitated.

Under the new scheme such Powers of Attorney are separated into two types that can be combined into the one document. The first type is a Continuing Power of Attorney which deals purely with financial business. The second type is a Welfare Power of Attorney which deals purely with personal decisions and powers, for example, consent to medical treatment or decisions as to place of residence. It is possible for an individual to grant a Continuing Power of Attorney in favour of one person, for example, a solicitor, and Welfare Power of Attorney in favour of another person, for example, a relative or welfare worker.

As welcome as these changes are it will become more complicated to set up Powers of Attorney and it will be very important that they are properly framed so that they can be registered. In addition, anyone operating a Continuing Power of Attorney must keep good records of their transactions in case their actions are investigated by the Public Guardian's Office.

It is important that anyone consider granting a long term Power of Attorney should speak to a solicitor who knows exactly what needs to be done to ensure that the Power of Attorney is set up properly. The consequences of failing to do so could ultimately be expensive and cause unnecessary problems to relatives and those caring for an incapacitated adult.

Part 3 of the Act, which also came into force on April 2001, introduces an entirely new procedure which should greatly simplify matters for families and carers of certain groups of incapacitated adults where no Power of Attorney exists. Under Part 3 of the Act, if an adult is incapacitated, relatives or carers can apply to the Public Guardian's Office for limited authority to operate bank or other accounts held by the incapacitated adult. This will allow relatives or carers to pay, for example, rental or nursing home charges and support the incapacitated adult. Activities of the individuals who are allowed to operate the account will be subject to monitoring by the Public Guardian's Office and the authority given to those individuals will be limited to a set period of time. This new procedure may not suit every case and is primarily to assist those of modest means or where a short term arrangement is required. For individuals of greater means, or, where a long term arrangement may be needed, for the moment it would be still be necessary to apply for appointment of a Curator Bonis although when other parts of the Act come into force there will also be new procedures for such longer term arrangements.

Professional advice should always be taken on the most suitable option now available for any particular individual's situation. If you are interested in learning more, for example, because you are concerned about your own situation or that of a member of your family please contact the author of this article, Andrew Malone, at our Castle Douglas office to arrange an appointment. We will be pleased to offer a short initial consultation on a no fee basis to provisionally assess what may be the best option for any particular individual to deal with a possible or current adult incapacity situation.

Useful Addresses

The Office of the Public Guardian
Hadrian House,
Callander Business Park,
Callander Road,
Falkirk. FK1 1XR
Telephone: 01324 678 300
Fax: 01324 678 301
Website:www.scotcourts.gov.uk/html/opg.htm
Email: opg@scotcourts.gov.uk

ENABLE
6th Floor,
7 Buchanan Street,
Glasgow.
G1 3HL
Telephone: 0141226 451
Email: enable@enable.org.uk

Royal Association for Disability and Rehabilitation (RADAR)
RADAR - 12 City Forum,
250 City Road,
London ECIV 8AF
Tel: 020 7250 3222.
Website: www.radar.org.uk
Email: radar@radar.org.uk

ASCS - Advice Service Capability Scotland
11Ellersly Road,
Edinburgh.
EH12 6HY
Telephone: 0131 313 5510
Text Phone/Minicom: 0131 346 2529
Website: www.capability-scotland.org.uk
Email: ascs@capability-scotland.org.uk

Alzheimer Scotland - Action on Dementia
22 Drumsheugh Gardens,
Edinburgh.
EH3 7RN
Telephone: 0131 243 1453
Website : www.alzscot.org
Email : alzheimer@alzscot.org

Age Concern
113 Rose Street,
Edinburgh.
EH2 3DT
Telephone: 0131 220 3345
Fax: 0131 2202779
Website: www.ageresource.org.uk
Email: enquiries@acsinfo3.freeserve.co.uk