Sections 93 to 113 - together forming Part VII of the Mental Health Act - deal with cases where a person is judged to be incapable, by reason of mental disorder, of managing and administering his/her property and affairs.
The Court of Protection - an office of the Supreme Court - exists for the protection and management ... of the property and affairs of persons under a disability [Section 93]. However, in practice, a considerable number of cases are dealt with by the Public Trust Office which, as well as being the administrative arm of the Court, also has considerable delegated powers under the Public Trustee and Administration of Funds Act 1986. The Public Trustee is a specific person to whom these powers are delegated and who runs the Public Trust Office.
In determining whether a person is capable of managing his/her property and affairs, medical evidence is taken into consideration. If the Court of Protection or Public Trust Office does find the person to be incapable, then that person is referred to as a patient. However, it is important to note that the person may not actually be a hospital patient, and often will not be detained under the Mental Health Act at the time. Detention under the Mental Health Act does not itself give any other person the right to manage the detained person's financial affairs or property, nor does a Guardian have any such powers.
There are four important ways in which another person may manage the financial affairs of someone who is incapable of doing so because of mental disorder. Three of these involve the Court of Protection / Public Trust Office, the fourth generally does not.
A power of attorney is a legal mechanism where one person (called the donor) can give another person (the attorney) the power to act on his/her behalf in specified matters. The attorney can enter in legally binding commitments of behalf of the donor. However, this ordinary Power of Attorney comes to an end if the donor becomes mentally incapacitated.
In contrast to the ordinary power, an Enduring Power of Attorney can still be valid even if the donor becomes mentally incapable. In fact, many such arrangements are set up so that they only take effect when the donor becomes incapable of managing their own affairs due to mental disorder - until this happens, the attorney has no powers.
When the donor becomes mentally incapable, the attorney cannot just go ahead and act on the donor's behalf. It is necessary for the donor to apply to the Court of Protection to register the enduring power. The attorney has to tell the donor and the donor's relatives that such an application is being made, and they can object to it in court.
An Enduring Power of Attorney can apply only to the donor's property and affairs, not, for example, decisions about medical treatment.
To avoid invoking the full procedures of the Court in appointing a receiver, there is a simplified procedure where someone's estate is less than a specified limit [£ 5,000 in January 1997]. This procedure is itself not necessarily required if the person is claiming DSS welfare benefits and their money is less than the limit which can be dealt with by a DSS appointee.
The Public Trustee has delegated powers from the Court to deal with these cases. However, as well as the savings/capital amounting to less than the specified limit, there are other requirements - and the person's affairs must be fairly straightforward.
An applicant has to apply for a Direction of the Public Trustee. The formal application has to be supported by a medical certificate, in a standard form. The applicant then has powers to manage a wider range of the person's affairs than a DSS appointee, including the power to operate a bank/building society account, but not such a wide range as a receiver.
The applicant can also normally undertake various other matters, such as enter into, and end, a tenancy agreement. Therefore, there may be circumstances in which it is appropriate to apply for a Direction of the Public Trustee, even if the person's savings are less than those which could be dealt with by a DSS appointee, so than an applicant can be given formal permission to deal with certain matters.
If a person has over a certain limit of money [£ 5,000 in January 1997], and/or they own property or their affairs are otherwise more complicated, it is necessary to apply to the Court itself to appoint a receiver.
A receiver can be anyone suitable (references are taken up by the Court to assess suitability); quite often it is a relative or friend, if one is willing to take this on. In deciding who to appoint as a receiver, the Court will take into account any potential conflict of interest. The receiver can be living anywhere. As a last resort, if there is no-one else suitable and willing to act as receiver, the Court will appoint the Public Trustee herself as receiver.
Receivers have wider powers than applicants appointed by
Direction of the Public Trustee, especially in relation to
property, shares, etc. The powers of a particular receiver will
be set out in the Court Order under which they were appointed.
Generally, a receiver will be expected to:
Receivership need not be permanent and the Court will consider a patient's request for reviewing the need for it, taking into account medical evidence.
Many people with a mental disorder living in care homes, and some living in the community, will have an appointee for Department of Social Security [DSS] welfare benefit purposes, if they are not capable of managing their own benefit matters. The DSS regulations provide for the appointee to manage DSS benefit on behalf of the person concerned only during the week in which that particular payment is due. Any money left over at the end of that week constitutes savings/capital and the appointee is not formally authorised to deal with this money. The appointee is generally not authorised to deal with any other financial affairs of the person, other than DSS benefits.
However, the Court Of Protection / Public Trust Office could not manage numerous applications in respect of small sums of money, and as a concession by the Court, it is accepted that the DSS appointee can deal with savings up to a specified limit [£ 1,700 in January 1997]. This concession does not give the appointee the right to operate a bank account on behalf of the person, although some individual banks/building societies may in practice allow this to happen. However, if the money is in a "clients' account" properly run by an organisation, then this is an acceptable way of managing the cash.
The appointee must act reasonably, and all money must be accounted for and protected from loss or mis-use. The appointee is personally liable for this money and complaints from others about how the appointee was handling the person's savings would be investigated by the Court Of Protection / Public Trust Office.
An appointee will not be used to manage someone's DSS affairs if the Court of Protection has appointed a receiver. The receiver her/himself would normally deal with DSS matters.
More information on these matters can be obtained from the Public Trust Office.