News
Access To Funds – A Possible Alternative To Guardianship
Date: 15 October 2009
Author: Sara Smith
We recommend to all clients that they should put in place a Power of Attorney to safeguard against the situation where they can no longer make decisions about their finances and their welfare for themselves. However, Powers of Attorney can only be granted when the granter has full capacity to understand the nature of the powers that he is granting in favour of his Attorney. A Solicitor or a Doctor must sign a certificate attached to the Power of Attorney to confirm this and also that he or she is satisfied that the granter has not been coerced or bullied into granting a Power of Attorney.
Of course, this begs the question - what happens when it is too late for a Power of Attorney to be granted. What if a person has a stroke and cannot act for himself or herself, but had not got round to granting a Power of Attorney beforehand? Once a Bank knows that someone has lost capacity, they have to freeze the person's account so no money can be paid in or taken out. Inevitably, family members may then need to meet all costs - especially care home fees if the individual has to move into residential accommodation.
Under the Adults with Incapacity (Scotland) Act 2000, there is the option of having somebody appointed as the individual's Financial (and possibly Welfare) Guardian. This process is lengthy and expensive and involves a number of medical and other reports being obtained, the submission of an application to the local Sheriff Court and a court hearing (albeit in a closed court.) If the individual owns a house or a flat this is really the only option as the Guardian's interest needs to be noted in the public property records to enable him or her to deal with the property (usually to sell it to meet care costs.)
However, there is another option under the 2000 Act which enables access to the person's funds after he or she has lost capacity, when an application for a full guardianship is not required. The technical name under the Act for the person is the "Adult", and the option is the Access to Funds Scheme. Someone (usually a family member) can apply to the Office of the Public Guardian for a Certificate to do a number of specific financial transactions with the Adult's funds. This person is called "the Withdrawer."
For example, the Adult may have a substantial amount of money in a savings account which is required to pay nursing home fees but the Bank are not able to release this money. The Withdrawer must work out how much money the Adult requires on a monthly basis to cover his or her needs (care costs, newspapers, clothes, outings etc) and detail this in the application. A request can then be made to transfer a lump sum from the savings account into the Adult's current account. Furthermore, additional funds can be transferred to cover the cost of the medical certificate (required as part of the application process), legal fees (up to a capped level) and any arrears of care costs which have built up while the application is being processed. The Withdrawer can then open an account in his or her own name called the "designated account" into which the requested sum is fed each month from the current account to allow the Withdrawer to meet on-going expenses on behalf of the Adult.
As the account is in the name of the Withdrawer, they will get the bank statements and can check all necessary payments are made. The Adult is protected as the Office of the Public Guardian have to approve the proposals first and the Withdrawer has access to their money for very limited purposes. Copies of all Bank statements must be sent to the Office of the Public Guardian, which is a further safeguard against misappropriation of funds.
The current account must be in the Adult's sole name (i.e. not a joint account or an account with third party rights) and it must be suitable for making regular withdrawals (i.e. no interest penalties.) If the Adult does not have a suitable current account then there is an extra preliminary step in the procedure to open up a suitable account in the Adult's name from which funds can be fed into the designated account. The authority to access funds is usually granted by the Office of the Public Guardian for a period of three years.
This is the most common scenario, but there are other transactions possible under this scheme. Other examples include opening a new second account in the Adult's own name, such as a high interest savings account where there is no such account at present, or closing an account in the Adult's name. The Office of the Public Guardian charge £65 to process the initial Access to Funds application but for every supplementary application for a further transaction the charge is currently £10.
There is a great deal of flexibility under the Access to Funds Scheme, but it is often overlooked as an option and it is important that more people are aware that it can be used in the appropriate circumstances.
Please contact Sara Smith or Liz MacKay if you would like to know more.
