I am lucky in that I have never had any involvement with the Court of Protection. In fact, before covering a recent story about Charles Stanley’s boosting of its Court of Protection team, I had never heard of it.
I have not had to look into it because I don’t know anyone who has had to use it. Others, though, have not been so lucky.
When carrying out the research for this feature, I heard about some horrific accidents that people had been in. Someone could be riding their bike along the road and get clipped by the wing mirror of a car, which throws them into a ditch. When this happens, it can take only a split second for them to receive some horrendous injury, and then the course of their life changes.
The Court of Protection is based in London and deals with decisions or actions taken under the Mental Capacity Act 2005. Its role is to make decisions on financial or welfare matters for people who can’t make those decisions at the time they need to be made because they lack mental capacity.
If you’ve got a £500,000-a-year care bill, a £10m settlement isn’t a lot of money
There are many individuals who may need to use the Court of Protection, such as those with cognitive impairments like dementia, learning disabilities or acquired brain injuries.
If a person has concern for themselves but still has the mental capacity to appoint others to assist them with their property and affairs or personal welfare, they can do so under a Lasting Power of Attorney (LPA). This is often the case for elderly people in the early stages of dementia.
But if that person no longer has the capacity to make this decision and does not already have an Enduring Power of Attorney or an LPA, the Court of Protection steps in to appoint a ‘deputy’ to look after their affairs on their behalf. In many cases, this deputy tends to be a close relative, but often a professional deputy, such as a solicitor, is appointed.
Evelyn Partners director Paul Hudson looks after a lot of Court of Protection cases, especially those relating to personal injury claims.
It’s a higher responsibility we have in dealing with a particular client. So we have to be mindful
In the case of a catastrophic injury, a person will usually have a solicitor appointed as a professional deputy or professional trustee to make decisions on their behalf. Even if the injury is such that they have not lost mental capacity, Hudson suggests they enlist the help of a professional deputy as well as a lay deputy.
Once a settlement has been paid to the client, the deputy will often enlist the help of a financial adviser to decide on the best course of action for this money.
“We do some pre-settlement work as well,” says Hudson.
“And I actively encourage deputies to engage us in the process as soon as possible because, the earlier we can talk to a client about what it means to have millions of pounds, the better.
“When it comes to the point where an adviser needs to be involved, it’s essentially a beauty parade of, usually, two or three wealth managers.
It’s not always a lump sum; it can be a periodical payment
“We’ll go and meet the client, usually for 45 minutes to an hour, and effectively pitch to them.
“A professional deputy and trustee will only ever put an advice firm or individual in charge that is more than capable of doing the job, so [the beauty parade] is more about whether you get on with the client and whether they feel they can trust you.
“You could be looking after their money for 30 to 40 years. This is all the money they will ever have. Many of them will never work again. Few of them had wealth beforehand.”
“We joke that sometimes it’s just the colour of your shirt that will sway them, but it’s a very personal industry. It’s all about the people,” Hudson adds.
Once the adviser has been selected, they will have a conversation with the client if they are able to, or with a deputy if not, about the best way of managing their money. A key part of the process is the cashflow model.
“Cashflows are not new. We’ve used them within the industry for a long time,” says Hudson.
Every client I have in the Court of Protection space is highly vulnerable. The bar is higher. So we’ve got to tread carefully
“But every single decision that’s made — in terms of how much risk we need to take, how much should be invested, how much cash we should hold — all comes back to the cashflow. It is absolutely crucial.
“We’ll go through all the potential income expenditure and the type of award. It’s not always a lump sum; it can be a periodical payment.”
Empathy is key
It takes a special kind of adviser to work with clients in the Court of Protection space.
“Generally speaking, those in our profession make wealthy people wealthier,” says Hudson. “And that is important, of course. But, for these types of client, it’s entirely different. They don’t have aspirations or goals or dreams — they have needs.”
I actively encourage deputies to engage us in the process as soon as possible
Empathy, he says, is key.
“It’s different; it’s less sales-y. It’s everything they ever have, and they put so much trust into you. You’ve got to try and understand what they’re going through.”
And these clients are at the height of vulnerability.
“Every client I have in the Court of Protection space is highly vulnerable. You can’t really get more vulnerable. The bar is higher. So we’ve got to tread carefully.”
Clients in this space often start with a large lump of money rather than build up to it.
“I’ve got clients who are four or five years old who have been given an award of, say, £10m–£12m. But that money has to last them and their needs for their lifetime — maybe 50 to 60 years. So actually, if you’ve got a £500,000-a-year care bill, £10m isn’t a lot of money.”
Even if the claimant has not lost mental capacity, Hudson suggests they enlist the help of a professional deputy as well as a lay deputy
“We can’t underestimate the power of what we’re doing in terms of helping them understand their budget; how much they can afford to spend, how much they can’t afford to spend, how much they should invest, how much risk there is, and how this will make a difference to their lives.”
As practitioners from the financial planning side, advisers are still bound by the Financial Conduct Authority’s rules, but also by the Mental Capacity Act. The Court of Protection is a High Court within the UK, so its powers and authority trump the regulator’s.
“It’s a higher responsibility we have in dealing with a particular client. So we have to be mindful,” says Hudson.
“We also have to be mindful we are dealing with solicitors who often have litigated to get the money and they wouldn’t hesitate to litigate against us should we get something wrong. So we’re always very careful.”
Every person in the Evelyn Partners Court of Protection team has had specialist training and has some greater knowledge and understanding of the court.
These types of client don’t have aspirations or goals — they have needs
“We don’t allow just anybody to do it. You have to be part of the team, and you have to pass the annual test we set internally.”
Court of Protection advising is a niche area, but Hudson believes cases like this will increase.
“There are more people on the roads. There are more humans in the country. There are more medical procedures being done.
“So, ultimately, there are more people who are being injured and there are more people who are litigating.”
This article featured in the October 2023 edition of MM.
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