Where we administer a fund for an incapacitated adult or child we often employ professional carers to assist P, who might be severely disabled.  In addition to professional care, we might financially compensate family members who allocate significant time and effort in supporting P’s day-to-day needs.  Sometimes a parent has had to give up paid employment to look after a child.  Others might wish to save P’s fund the commercial cost of professional care, by choosing to take on some of that work themselves.  

In such circumstances, a Deputy might authorise a payment to a family member on account of the cost of care or case management they are providing by giving up their time to support their vulnerable relative.  The Office of the Public Guardian is currently in the process of reviewing all such on-going gratuitous care payments made to families by lay Deputies.  

Senior Judge Lush has recently released useful guidance (in the matter of Re HNL [2015] EWCOP 77) dealing with gratuitous care allowances paid by Deputies to family members, particularly in cases where P has received a damages award following a successful medical negligence claim or injury.  

In Re HNL the lay Deputy (“ATL”) was paid £23,000 per annum from his sister’s (“HNL”) periodical payment, a decision that had been agreed by the Court before the implementation of the Mental Capacity Act 2005.  Following the implementation of the Act and a review of the ATL’s financial arrangements, the OPG referred the matter of the £23,000 gratuitous payment back to the Court of Protection to confirm whether that arrangement could continue as ATL’s new order under the MCA 2005 did not, according to the OPG, “contain a clause providing for the deputy to receive payments from P’s estate and has not been provided with evidence which supports the Deputy’s submission that he has been authorised by the court to receive these payments”.  

The application before the Court culminated in Senior Judge Lush directing that the Deputy arrange for his provision of care and case management to HNL to be evaluated and quantified in a report to be prepared by a professional brain injury case manager.  

That report would provide the Court with a basis for quantifying ATL’s care/case management contribution and Senior Judge Lush stated that the Court would make “any adjustments that may be necessary taking into account the fact that the deputy is not a professionally qualified carer or case manager and that no income tax or national insurance contributions are payable on the payments made to the Deputy”.  

The report that was commissioned indicated that, on a commercial basis, the cost of care provided by ATL might be close to £50,000 per annum.  ATL was however very clear that he would not wish to withdraw more than the £23,000 per annum from HNL’s fund that was originally agreed by the Court, despite that being significantly lower than the commercial rates proposed by the case manager.   

Senior Judge Lush made reference to the case of Re HC [2015] EWCOP 29 where he indicated that gratuitous care payments would, subject to affordability, take the cost of commercial care as the ceiling and apply a 20% reduction.  This reduction reflects that fact that no income tax or Class 2 NICs will be payable in respect of a gratuitous care allowance under current HMRC exemptions.

The Court was clear to emphasize that a Deputy awarding themselves a gratuitous care allowance, without prior authority from the Court of Protection, would breach their fiduciary duty not to benefit from their position and would create a conflict situation.  As such, a Deputy must always seek prior authority from the Court of Protection to pay themselves a gratuitous care allowance.  A lay Deputy must also seek prior authority before making such a payment to any other family member.  

Not every application for a gratuitous care allowance will be successful however; in Re HNL the following factors contributed to ATL being able to continue to claim the £23,000 per annum:

  1. The care and case management services provided by ATL were cited as being exemplary;
  2. The payments were sustainable, made from income  (HNL’s periodical payment) thereby not encroaching on P’s capital;
  3. The payment represented a huge saving on the commercial cost of the services as set out in the case manager’s report.     

It is notable that Senior Judge Lush also gave ATL the option of index-linking future payment of the allowance.  

The OPG is also in the process of reviewing the position with gratuitous care payments approved by professional Deputies to family members where they are providing care to P.  We expect the OPG to issue a practice note shortly.  Senior Judge Lush has however indicated that the OPG will require professional Deputies to review these payments regularly, possibly as thoroughly as commissioning expert reports on the cost of care.  That will increase costs to P, in commissioning a case manager or other professional to prepare such a report, the legal costs in preparing the application to the Court, as well as the Court fee (currently £400).  

Professional Deputies should therefore be urged to consider the potential impact of such reviews on overall Deputyship cost.  They may wish to consider including an allowance dealing with these reviews in their projections on future Deputyship costs, where they are being included in a claim for a damages award.  We hope that the OPG’s guidance once published will provide clarity on how frequently such reviews need to be undertaken.  Watch this space.