01.03.17

Over the coming months we will be highlighting real families and their own unique situations surrounding planning for the future for their disabled and vulnerable children. We have changed the names of the family members, but each story is based on real clients we have assisted and covers some difficult problems.

About this Family

Susan is mum to James, an amazing 24-year-old man with Cerebral Palsy and severe learning disabilities. James has fairly high care needs and unfortunately doesn’t have the mental capacity to make any decisions for himself. This is extremely difficult for Susan and is coupled with the fact that she manages this situation on her own as tragically her husband and James’ father, David, died in 1997. James is Susan and David’s only child.

James lives in a residential care home, which he loves. This is funded by the Local Authority and has been for 5 years. Susan is the appointee (person appointed by the Department for Work & Pensions) for James’ benefits and she has a close relationship with the staff at her son’s home.

What is the situation?

David’s father and James’ paternal grandfather died in 2014 leaving his estate to his three children, one of whom being David. As David had died in 1997 and his father didn’t change his own Will after David had passed away, the terms of his father’s Will stated that, in the event of one of the children dying before him, their share of the estate would pass to their own children. Due to the wording of the Will, James inherited a large sum directly from his grandfather.

As the inheritance passed directly to James, it became part of his own personal savings, which created several issues for Susan (on James’ behalf). She realised that receiving an inheritance would have a significant effect on James’ situation. These issues were:

• James does not have the mental capacity to understand money and, therefore, is unable to manage his own finances. As James is an adult, any money in his name can only be dealt with by him unless another person has the legal authority to manage it on his behalf.
• James’ capital assets significantly increased when he received the inheritance so his financial situation had to be reassessed and he then no longer qualified for his means tested benefits and Local Authority funding.

What were the family’s options?

It had been suggested to Susan that she should place James’ inheritance into a trust fund for him. She had been told that this would allow her to manage the funds on behalf of James and, by holding the money in a trust fund, James would continue to qualify for his means tested funding and benefits.

Unfortunately, Susan could not take this route for two main reasons. Firstly, as the money belongs to James it is only him that can decide whether to place it in a trust.  He does not have the mental capacity to do this and Susan did not, at the time the inheritance was received, have the legal authority to manage the funds for him; even though she was his appointee for benefits.

Secondly, if Susan had been able to manage the funds for James, transferring them into a trust would be considered a ‘deliberate deprivation of assets’ or in other words, hiding assets to continue to qualify for benefits and Local Authority Funding. So unfortunately the money would still be taken into consideration and James’ means tested benefits and Local Authority funding would still be affected by the inheritance.

What was the solution?

The first action required was to make an application to the Court of Protection for Susan to be appointed as the Property & Financial Affairs Deputy on James’ behalf. As James doesn’t have the mental capacity to manage his own money this was the only route to protect James in this type of situation.

Susan also needed to liaise with the Department for Work & Pensions to reassess James’ benefit entitlement and notify the Local Authority of the inheritance, working with them to calculate the amount due to them from James’ inheritance.  As James’ Deputy, Susan was then able to pay the calculated sums out from the inheritance.

Impact

For James personally there has been very little impact. He is fortunate that his mum was able to deal with everything on his behalf and, as he lacks the mental capacity to manage his own finances, he did not have to be involved with the process. Unfortunately, he lost a large chunk of his inheritance as this went directly to the Local Authority as there was no way around this.

However, if James’ grandfather had updated his Will, or reviewed it after James’ father had died, it could have been structured differently to take into consideration James’ disability and lack of mental capacity to manage his own money. For example, the Will could have included the provision to put the money into a Discretionary or Disabled Person’s Trust for James’ benefit.  This additional planning by his grandfather would have avoided this difficult situation arising.

Susan now also needs to consider what will happen to any money that James has on his own death, which is an extremely difficult consideration for any mother.

If you would like to talk to us about your own situation or Susan’s situation above is familiar to you, please do get in touch.