Mental Capacity and Money Matters

Why might it be of interest?

While the Mental Capacity Act applies to every aspect of a person’s daily living and ability to make – or not – their own decisions this document is specifically about how that ability can affect a parent’s ability to support or manage a young person’s financial affairs.

Up to the age of 18 most parents will have been managing their young person’s money at their own discretion unless the young person is able to manage their own money.  We are talking about money from benefits and potentially money from other sources such as the child trust fund; savings; inheritances.

If your young person is over 16 and in receipt of PIP it is likely that you are their DWP Appointee which allows you to manage their benefits – most likely just PIP (or DLA if still on it).  You don’t need any further authority to manage money from benefits even when they turn 18.  However, any other money they have that is currently managed by you – well that’s a different matter when they turn 18.

And this is what we’ll be looking at in this document and parent session.

What financial matters are we likely to be supporting our young people with?

Benefits:

• PIP
• UC
• Housing Benefit
• Making applications and managing the resulting money
• Direct Payments from Adult Social Care

Savings:

• Child Trust Fund
• Building society accounts
• Inheritances
• (Investments)
• A build up of unspent benefits eventually count as savings

Example:

Enhanced PIP amounts to £478 pcm, Or £5740 pa

High mobility amounts to £333, Or £4006 pa

 UC for a 25+ who has basic and LCWRA elements amounts to about £823 pcm, That’s £9876 pa

(other young people may have more or less due to age and additional benefits)

 

I’m going to use the term ‘savings’ from here on to refer to all of the above.

 

Bank accounts:

• If we are a DWP Appointee the bank account should be in your name – not that of the young person
• It could be a joint bank account with the yp – this can create problems which we’ll talk about
• Or an account with your name on behalf of your young person’s name
• If it goes into an account in the yp’s sole name you don’t actually have the right to manage that account as a DWP Appointee
• Some banks offer a specific type of account for DWP Appointees
• Whichever option you choose the yp’s benefits should be paid into an account that is only used for this purpose
  • Don’t mix their money with yours

 Potentially earnings

 

Mental Capacity Act and how if affects how we can support our young person

• A person does not HAVE or NOT HAVE capacity, full stop
• Capacity is decision and time specific
• So a person can have capacity for some decisions or at some times and not for other decisions or at other times

Example:

A young person may understand the need to pay in a shop or café and can tap their card or pay with cash, but they may not have the capacity to budget and understand when they don’t have enough money or something is too expensive

A person is presumed to have capacity to make a decision unless there is a reasonable belief that they don’t have capacity – and this is when a mental capacity assessment must be carried out.

It will be clear cut for many of us but something of a grey area for those of us with more able young people.

From age 16, and definitely from age 18, professionals will presume a young person can and will make their own decisions unless proven otherwise.

Authority to make a decision on another person’s behalf

• DWP Appointee – managing benefits
• LPA – finance
• Deputyship – property and finance
• Best interests decision

If a person is deemed to have mental capacity then the decision is theirs to make

• You cannot override them
• A professional cannot override them

They are allowed to make unwise decisions

A series of unwise decisions does not indicate a lack of capacity as decisions are not linked

Let’s look more closely at the 5 guiding principles in the MCA:

• assume a person has the capacity to make a decision themselves, unless it’s proved otherwise
• wherever possible, help people to make their own decisions
• do not treat a person as lacking the capacity to make a decision just because they make an unwise decision
• if you make a decision for someone who does not have capacity, it must be in their best interests
• treatment and care provided to someone who lacks capacity should be the least restrictive of their basic rights and freedoms

A person cannot make a decision if they cannot:

• understand the information relevant to the decision
• retain that information
• use or weigh up that information as part of the process of making the decision*
• communicate their decision

*understanding consequences:  there is a difference between not understanding the consequences which could indicate that a person cannot make a decision and young people who do understand the consequences but they don’t care enough to not make a poor decision.  If you believe it is the former you have the basis for making the case that the young person does not have capacity to make the decision.  Sadly, not if the latter.

 Best interests:  Only relevant when a person lacks mental capacity – more about this when we talk about authority to manage an individual’s financial affairs.

How can we support an individual to make a decision?

We should be doing these things regardless of whether we think an individual has capacity or not – it’s just good practice – and you may find that your young person can make a decision you thought they wouldn’t be able to manage.

• Does your young person have all the relevant information?
• Do they have information about alternatives?
• Has the information been explained in a way that’s easy for them to understand?
  • For example:
    • by using simple language
    • visual aids
    • easy read guides
• Have different methods of communication been explored?
  • For example:
    • if your young person is non-verbal how do they communicate
    • can anyone else help with communication, a family member, carer, advocate
    • is someone present who gets their form of communication
• Are some times of the day better for your young person than others?
  • For example:
    • mornings are always rushed and a bit tense so they are more relaxed after school and later on in the day
    • or they’re at their best in the morning and tired later on
    • maybe when they take medication it affects their mood
    • or what they’ve been doing during the day
• Are there particular locations where your young person is more at ease?
  • We’d probably assume home but maybe at a club or activity?
• Can the decision be delayed until they are able to make the decision?
  • This is very relevant if your young person has additional needs that fluctuate

This is your young person so you probably know these things but keep them in mind when discussing the decision:

• What do they generally want to happen
• Do they have any particular beliefs – this might not just be religious
• Do they like to participate or do they prefer to let someone else get on with it
• What have they decided in the past
• Have there been any preferences expressed previously

More information about authority to manage your young person’s financial affairs

DWP Appointee:

• Usually applied for when a young person turns 16
• I don’t know of any instances where a parent has been turned down
• Still an option even for more able young people
• ONLY allows you to manage benefits – but all benefits
• You can’t open a bank account in the young person’s name
• Benefits are paid into an account in your name (usually)
• If your young person says they want to manage their own benefits then technically you should stop being their DWP Appointee

Best Interests decision:

• This comes into play when it has been established that a young person DOES NOT have capacity to make a decision
• Usually collaborative; ie involving you and any other interested parties

Best interests is a process of considering matters from the point of view of the person who lacks mental capacity and what the best option is for them.

This is really important – the decision must be what’s best for the person lacking capacity – not what suits you or anyone else involved in making the decision even if your preferences are perfectly reasonable.

There are a number of considerations to make in the process of making the decision, such as:

• person’s wishes / feelings
• beliefs
• their participation
• views of others
• past decisions
• previous preferences

Again, if a person is deemed to have mental capacity it is their decision to make

What is a reasonable belief that a person lacks capacity?

• Changes in an individual’s behaviour
• Changes in circumstances that lead another person to believe that the individual now lacks capacity to make a specific decision
• An individual previously able to make a decision but doesn’t seem to be able to do so now

It’s likely to be a person who knows the individual well who will first raise a concern.

 

Power of Attorney and Deputyship

These are mutually exclusive!

An individual cannot have capacity and not have capacity for the same decision at the same time.

What do these authorities do for you?

Both PoA and Deputyship allow you to manage your young person’s financial affairs as if you were the individual.

You will need to be able to account for your actions

• So keeping good records is essential
• You don’t have to keep receipts for every purchase!
• But you should keep evidence for bigger decisions
• And keep your money and theirs separately
• These authorities also allow you to manage money and savings other than benefits
• You can open bank accounts in your young person’s name and manage them

You can’t apply until a young person is 18 but you can prepare the paperwork

Both can take several months to process (likely a deputyship will be longer)

There is a cost

Power of Attorney

If your young person can understand that giving you their PoA allows you to look after their money and help them manage it – then you can be their attorney

They don’t have to understand all the ins and outs of their finance:

• The details of what money they have
• Where it comes from
• What things cost
• What they are allowed to spend it on

If they understand that you already help them and they are happy for you to continue to help them that’s enough.

I recommend looking at the Mencap Easy read guides

• My personal opinion is that if your young person can follow this then they have the capacity to grant you their PoA
• If they can’t follow this then it doesn’t automatically mean that you can’t have their PoA but you would have to carefully demonstrate that they do understand what they are doing
• https://ruils.co.uk/article/lasting-power-of-attorney-easy-read/

An independent person has to sign off (certificate provider) to agree that the young person has the capacity to grant a PoA.

This can be a family friend – but not family – or a professional – GP, solicitor

I would recommend that you document the conversation – or conversations – you have with your young person about having their Power of Attorney – and you don’t need to use that term!

This might help the certificate provider and it may be useful as evidence if you are challenged.

Choose your time of day and place carefully, keep it simple but ensure that the young person does understand what they are agreeing to.  A typical scenario would include:

• Explaining that you look after their money and would they like you to continue to look after and help them with their money
• Go off topic for a few minutes
• Return to the money topic – have they remembered the conversation so far?
• If it’s been entirely forgotten you may need to try different tactics or abandon the idea
• If not make sure you record any comments that demonstrate that the young person understands
• And record a clear agreement

Deputyship

You can only have a deputyship for someone who DOES NOT have capacity to manage their financial affairs or to grant you their PoA.

You apply to the Court of Protection and the whole process can take the better part of a year and it is quite involved.

It involves several forms, a capacity assessment (usually your GP), informing other interested parties, etc

You have much the same powers as with a PoA.

If your young person only has benefits to their name then you probably don’t need a deputyship to manage their financial affairs.

You may want a deputyship if you feel that it gives weight to your voice.

You may need a one-off decision in some instances

• For example, to sign a tenancy agreement; access a Child Trust Fund
• Unfortunately, it is pretty much the same process and same timeline as the application for an ongoing deputyship
• And the court can decide to give you an ongoing deputyship

You have to provide an annual report to the Office of the Public Guardian.

I have been told this is not especially onerous but it is mandatory.

Bank Accounts

For our less able young people where parents are managing their money either as a DWP Appointee or with a PoA or deputyship things are more straightforward.

While you can’t open a bank account in the young person’s name as a DWP Appointee you are able to manage their money in an account in your name or possibly a joint account.  With a PoA or deputyship you can open a bank account in the young person’s name and still be able to manage it.

If your young person is technically deemed able to manage their own money you will need their consent to manage it for them without any official authority.

Keep separate accounts:  keep your money and theirs separate.  Why?

• UC can audit a person’s bank account
  • Not common as far as I can tell
• If you are on benefits yourself any money coming into a shared account may need to be accounted for
• Even if you are not on benefits you may need to account for amounts of money in the account
  • For example, you transfer £5000 in to pay for a holiday
  • You may have to prove this does not belong to your young person
• It just keeps things simpler on many levels
• There’s no absolute right or wrong time to separate your finances
  • If your young person is living at home and still at school or in college it is probably less urgent
  • But certainly by the time they are living independently or have left education your finances should be separate

Sole name:  If your young person has an account in their sole name you have no legal right to access that account – even if they manage their money unwisely or are unable to manage it at all.

Joint account:  this option can help you manage a young person’s money but you are both jointly responsible for the management of the account.

Use cautiously as if your young person might misuse the account you are equally responsible for fixing any problems.

Limiting a young person’s access to money

My recommendation – backed up by advice on at least one banking website – is to have at least 2 accounts for your young person:

• One for their benefits (and potentially other income) to be paid into
• A separate account for their spending money

My daughter’s benefits go into a standard bank account in my name (I am her DWP Appointee and she doesn’t have capacity to open a bank account).

I have a separate account – Revolut in this case – which I load up with money as needed

• No overdraft
• No access to her benefits money
• I set up regular outgoings from the benefits account

Both have phone apps so I can track them in real time

Her carers are happy to use the Revolut card as it has a limited amount of money at any one time and they have no access to her benefits

That is quite a level of intervention which some of our more able young people will not consent to.

The next level is effectively a ‘read only’ access to your young person’s bank account(s)

What this involves is a young person designating another person – or more than one – as a trusted person.

The trusted person can monitor activity on the account

They can’t directly intervene, so they can’t

• Make a payment
• Stop a payment

But they can see what’s happening and perhaps intervene with the individual if they spot unwise or dodgy transactions.

One parent who uses this system told us that when they noticed the young person was getting a lot of fast food they were able to have a conversation about it.

Another parent spotted that their young person had spent quite a lot in a phone store – on things they already had.  They were able to get the young person’s money back.

Hope Macy

https://www.hopemacy.com/business/family-connect/

Family Connect is an app developed by Hope Macy to just the above

You may find similar services offered by your bank.

These are usually aimed at older people who choose to have a family member oversee their finances but they’d work for our younger people.

But you do still need consent!

Further considerations

A little bit outside of the remit of this workshop

Wills and Trusts

Ideally we want to protect our young people from inheriting sums of money that will make them ineligible for benefits and also vulnterable.

Everyone should have a will – or your assets will be distributed according to the intestacy laws and it’s almost certain that this is not how you want your assets split.

In addition to a will you will probably want to consider a trust.

Any money you leave, or others leave, to your young person can be held in a trust for their benefit – but the money doesn’t actually belong to them so is not taken into account when considering eligibility for benefits.

Child Trust Fund

When your young person turns 18 they can access their CTF.

• If they can sign off the paperwork there’s no problem here – other than what you do with the money
• It is theirs so even if you put it into a bank account in your name it is still theirs and depending on the amount may be taken into account when applying for benefits or adult social care
• If they can’t sign off the paperwork you can try to get the financial organisation to release the money to you with evidence
• If they won’t this would be a situation for a one-off CoP

Adult social care package – direct payments

• This is usually managed by a parent – certainly for our cohort
• You don’t need any official authority to manage direct payments
• It’s just an agreement between you and adult social care

Benefits thresholds

PIP is not means tested so however much you have in savings does not affect eligibility

UC is means tested:

• Under £6000 is ignored
• Over £16000 – you are not eligible
• Remember that this affects your eligibility for the housing element
• Between £6000 and £16000 you are eligible but your benefit is reduced by a few quid for every £250 over £6000

Adult social care:

• All savings, assets, etc can be taken into account
• Income is not taken into account
• Over £23,250 – no help with care costs
• Over £14,250 – reduced help with costs
• People on benefits are likely to have to make a contribution towards their care package
• The government sets a minimum income guarantee
  • Individual as there are a few elements
  • Plus disability related expenses
  • When all these are added up the LA can ask (and they do) for the difference between this figure and the total weekly benefits

What counts as savings?

• Anything easily realisable may count as savings or assets
• Personal possessions (jewellery, car, furniture) doesn’t count
• Property that is not your main home
• There’s a longer list but this is broadly the categories
• A build up of income not spent will be counted as savings

You may wonder how a young person on benefits could possibly have a build up of benefits but there are situations where this can happen:

• Your young person is in residential care
• The young person lives at home and is not contributing towards household expenses
• Back payment of benefits (not counted for a year)
• In supported living but maybe less active than usual so not attending as many activities (winter colds, other illness, lack of inclination)
• Unspent income in addition to benefits
  • Young people on benefits can earn a certain amount before their benefits are affected