Deputyship vs Lasting Power of Attorney: Who Can Deal with Property?
Introduction
When a person loses the mental capacity to manage their own property and affairs, the Court of Protection may appoint a property and financial affairs deputy to act in the best interest of that person who lacks capacity, referred to as ‘P’.
Deputies are given their powers to manage the property and affairs of P by way of a Court of Protection Deputyship Order (Deputyship Order) under the Mental Capacity Act 2005. A deputy cannot act outside the powers that are expressly stated in the Deputyship Order.
In comparison to the authority given under a Lasting Power of Attorney (LPA), the authority given under a Deputyship Order is much narrower and conditional. If a decision falls outside the scope of the Deputyship Order, a deputy must make an application to the Court of Protection for the relevant authority, this application must be made in the least restrictive manner as possible.
Property in Land Restrictions of a Deputy
By default, the Deputyship Order does not give the automatic right to deal with P’s property in land. Although the Deputyship Order grants authority to a deputy to manage bank accounts, manage income and make transactions including paying for rent and household bills, a deputy cannot buy or sell property in land under a standard Deputyship Order.
By default, a deputy cannot:
- Rent out a property in land,
- Purchase a property in land,
- Sell or transfer a property in land
- Gift or transfer a property in land, or
- Engage in estate planning & inheritance tax management.
In order to do so a deputy must make an application with supporting evidence showing that the decision is in P’s best interest. The supporting evidence will include accommodation reports, independent financial advice, capacity assessments and consideration of the thought and feelings of P. The Court of Protection will then independently review and consider the application before deciding if authority is granted to the deputy.
LPA Comparison
An LPA is where an individual (the donor) donates authority another person (the donee, aka the attorney) while they have capacity. A LPA, by comparison grants a far less restrictive authority to manage the property and affairs of another individual. The reason for this, is because a LPA is created when an individual still has capacity.
There are two types of LPA’s available, the respective LPA will grant the donee authority to:
- Manage the Property and Financial Affairs of the donor, and/or
- Manage the Health and Welfare of the donor.
The donor will decide who specifically will manage their property and financial affairs, how wide the powers will be and what conditions they will impose on the attorney.
This means that the attorney usually will have the wider powers than a deputy, will still have to act in the donor’s best interest but will have greater discretion to dealing with the donor’s property and affairs.
The donee will not need to make an application to a Court for the same things a deputy will have to i.e. to make decisions regarding property in land unless said gift/sale is to the attorney due to conflict of interest.
Conclusion
Therefore, there are less restrictions placed on the attorney, and they have authority to deal with property in land on the donor’s behalf.
The distinctions and limitations of a deputy’s powers are essential. A deputy will only be appointed to manage the property and affairs of P, once they have lost their capacity. As such, greater restrictions are placed on the powers of a deputy, for example the need to apply to the Court of Protection for permission to deal with property in land.
The practical take away from the above, is that it is always best to ensure that a LPA is put in place early by our clients. This allows them to exercise their autonomy and give the donee greater flexibility if required.
However, in a situation where this was unable to be done, it is important to highlight that a deputy has restrictions on their powers. It is recommended that future plans such as selling a house be flagged when making the initial Deputyship application, as this can save time and costs to P.
If authority is not granted upon the initial application, then an application should be made as soon the need to deal with a property is established to avoid problems for P such as an accrual of care home fee debts, a property falling into disrepair, or squatters in a vacant property.
Furthermore, a deputy must constantly show they are acting in the best interest of P and can only apply for the relevant permission in the least restrictive manner as possible. A priority is placed on protection rather than convenience under a Deputyship Order.
A Court of Protection appointed deputy is a position of trust not ownership, understanding and being aware of the restrictions are essential to act in P’s best interests.
If you are unsure whether a deputy can sell or manage property, or you would like advice on putting a Lasting Power of Attorney in place, our Court of Protection & Deputyship team is here to help. Contact us on 0330 822 3451 for expert advice on Deputyship and Lasting Power of Attorney matters.