Children and the court of protection – swindon, bath, bristol, london diffuse anoxic brain injury

Deputyship or personal injury trust?

This is a question I have frequently been asked, often by parents of a child who has

Sustained a significant brain injury and about to receive a large award. Which is better?

Whether to proceed with a deputyship or a personal injury trust is not a simple matter of choice. Most cases will be restricted to one path or the other, and this is centred on the likely future capacity of the child. If the court of protection has jurisdiction, a deputyship will be appropriate. If not, deputyship will not be an option and a personal injury trust will be the only solution.


Establishing the court of protection’s jurisdiction

The first step towards deciding which is appropriate is to determine whether the court of protection has jurisdiction.Diffuse anoxic brain injury in order to do this, you must look at the mental capacity act 2005 (MCA).

Section 2(5) MCA confirms that “no power which a person may exercise under this act (a) in relation to a person who lacks capacity, or (b) where a person reasonably thinks that a person lacks capacity, is exercisable in relation to a person under 16”.

This part of the act appears to limit its application to those who are over the age of 16. However, moving on to section 18 we can see that further provision is made here for those under 16. Section 18(3) MCA adds that “the powers under section 16 as respects any other matter relating to P’s property and affairs may be exercised even though P has not reached 16, if the court considers it likely that P will still lack capacity to make decisions in respect of that matter when he reaches 18”.Diffuse anoxic brain injury

By their very nature, most children would not possess the capacity necessary to manage their property and financial affairs. However, the jurisdiction of the court of protection is established if the person under 16 is likely to continue to lack capacity when they reach 18. In simple terms, if the child has received an injury sufficient to impair them into adulthood, the court will be able to make decisions on their behalf even though they are under the age of 16 at the time of the application.

With all court of protection applications, medical evidence is paramount. It enables the court to be satisfied that they have jurisdiction to act. The medical evidence sought for a child should specifically address whether the child will continue to lack capacity beyond 18.Diffuse anoxic brain injury simply stating that a 10 year old child does not have capacity to manage their finances is not enough. The medical practitioner should look to the future and assess whether the child’s condition makes it likely they will not be able to deal with their own finances when they reach 18. This makes it all the more important to properly instruct your medical practitioner, to ensure that you receive the proper conclusion in the assessment.

Provided your assessment demonstrates a likely lack of capacity beyond 18, a court of protection application for deputyship is the appropriate route.

Borderline capacity

There are cases where the medical practitioner’s view is inconclusive. There may be elements of the child’s diagnosis which make the forecast to 18 particularly difficult; especially if the child is very young at the time the assessment is completed.Diffuse anoxic brain injury

It is sometimes not known whether the child will make a sufficient recovery in the years ahead to finally be able to manage their own affairs once they reach adulthood.

In these cases, the best course of action is to make an application for a deputyship. It is likely that the evidence presented to the court will be enough to establish its jurisdiction, and capacity can then be revisited at a later date. This offers the child optimal protection and is sufficiently flexible to allow for changes in the course of them growing up.

No capacity at 18. But why can’t I set up a personal injury trust for my client?

Where a person lacks capacity to make property and financial decisions for themselves, they are unable to sign important documents, such as a trust deed.Diffuse anoxic brain injury the court of protection will need to authorise someone else to do this on their behalf. The court of protection is extremely unlikely to authorise the execution of a personal injury trust where a person lacks capacity, as the deputyship regime is in place to deal with such a situation.

The case of re HM (SM v HM) [2011] EWCOP B30 established this, which has been affirmed in more recent cases. In re HM, her honour judge marshall set out the reasons why a deputyship will be appropriate in most cases where a client lacks the capacity needed to manager their property and affairs. Confirming the preference for deputyship, the judge explained that the deputy is able to deal with all of the person’s property and affairs, and not just those which are trust assets.Diffuse anoxic brain injury the duty to act in the person’s best interests and report to the office of the public guardian (OPG) annually adds a level of scrutiny and security. Further, the security bond that the deputy must take out provides some reassurance that inappropriately used funds may be recovered should the worst happen.

The court is able to control and limit the deputy’s powers, and person-specific, tailored orders can be made to suit a certain situation. Contrary to popular belief, there is no loss of entitlement to means-tested benefits, which has often been cited as a reason why a personal injury trust is preferable.

Capacity beyond 18 established

When a child is likely to possess capacity at 18, a personal injury trust is the appropriate way to hold the damages award during their minority.Diffuse anoxic brain injury this can continue into their adult years with their agreement. In most cases, children in this category are not likely to have sustained a major brain injury, although a trust may be suitable for some children with mild cerebral palsy.

The high court will need to approve the terms of a trust for a child, and it is necessary to consider this in the claim process. It is essential to have a professional trustee where the child will receive a large award, and the cost must be considered by the claimant solicitor.

The necessity of approval and a professional trustee stems from part 21.11 of the civil procedure rules:

“… The court would have to approve the terms of the trust deed and will almost invariably require that one of the trustees is a professional trustee to ensure that the fund is properly supervised.Diffuse anoxic brain injury in cases involving substantial sums, the court will also wish to see that professional financial advice has been taken to ensure that there is an investment strategy in place which is in the child’s best interests.”

It may be also be appropriate for the order to make provision for the professional trustees’ costs to be assessed by the senior courts costs office during the child’s minority, thereby affording protection to all parties.

A personal injury trust will allow a child to maintain their entitlement to means tested benefits as they grow older by ring fencing the award. As they are mostly bare trusts, any income from the trust will be taxed as the beneficiary’s own, meaning there are no separate HMRC requirements to manage.Diffuse anoxic brain injury

Conclusion

Where a child is unlikely to possess capacity at 18, deputyship will be the proper route to take. There are many benefits of coming under the court of protection’s jurisdiction, including the oversight of the OPG, the benefit of a security bond and the recent introduction of professional deputyship standards against which all professional deputies will now be monitored.

In borderline cases, deputyship should be preferred. It is the more cautious approach and funds can be easily transferred to a trust if capacity is gained later in life.

Where the child is likely to possess capacity, you will be able to establish a personal injury trust which will ring fence their compensation for the purposes of means testing.Diffuse anoxic brain injury A professional trustee will be needed where the award is significant.