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"Court
of Protection Receivership"
Your Questions Answered
1. What is a
Receiver?
A Receiver is a person appointed by the Court of Protection to deal
with the financial affairs of a person who is unable to do so for
himself due to mental incapacity.
2. What is mental
incapacity?
Mental incapacity is defined in the Mental Health Act 1983. A person
falls within the definition if he is incapable by reason of mental
disorder of managing or administering his property and affairs.
A doctor who knows the person well must sign a certificate to say
that, in his view, the person falls within the definition. The person,
usually referred to as "the client", will then come within
the jurisdiction of the Court of Protection. However, a Receivership
may not be necessary if the client has little or no property or
affairs to manage.
3. What is the
Court of Protection?
The Court of Protection is the part of the Supreme Court which deals
specifically with the affairs of people who suffer from mental incapacity.
The Court is presently situated in London, but it is anticipated
that in future the Court may also sit in regional areas. Directions
of the Court concerning a client's financial affairs are usually
given by the Master or one of his Assistants.
4. Who can be
appointed as Receiver?
Anyone can be appointed as Receiver provided they can demonstrate
their suitability to the Court of Protection. A Receiver does not
have to be experienced in financial affairs, but it should be someone
who can keep orderly records and who is used to operating bank accounts
and dealing with financial institutions. Most importantly a Receiver
should be willing and able to devote time to looking after the financial
affairs of another person on a regular basis. The person appointed
by the Court of Protection is often a relative of the client, but
there may be no suitable family member willing to be Receiver or
the family may decide to ask a professional such as a solicitor
or accountant to become the Receiver. The Court of Protection has
to approve the person and make the formal appointment.
5. What can
a Receiver do?
The Receiver deals with the financial affairs of the person who
is mentally incapable. The Receiver does not have authority to decide
where the client should live or what health care he should receive.
Decisions about personal care remain the responsibility of the next
of kin, in consultation with the doctor and care professionals,
and the client where appropriate.
The Court of
Protection makes a formal "Direction", detailing what
a Receiver may do in each case, in the "First General Order".
The Receiver may deal with the income of the client on a day to
day basis. However, any dealings with capital must be authorised
by the Court of Protection each time capital is needed.
The Receiver
is responsible for keeping in contact with the client and his family,
consulting him about his day to day needs, and how his money should
be spent. He must manage the income flow at an appropriate level
to cater for the client's regular living expenses. The client's
income is likely to come from various sources such as the Benefits
Agency, pension provider, stocks and shares and other investments.
6. What are
the Receiver's duties?
(a) Income
The Receiver's principal duties are to safeguard the client's assets
and to ensure that his day to day financial needs are met. This
involves managing a Receiver's bank account, into which all the
client's income is paid and from which all his bills must be settled.
The Receiver must ensure that all State Benefits are claimed. The
Receiver must also arrange for the client's income tax affairs to
be kept up to date, and should make tax returns if appropriate.
He may employ an accountant if necessary and pay his fees from the
client's income. The Receiver must submit an annual account to the
Court of Protection giving details of all monies belonging to the
client that have passed through his hands, and submitting a projection
of the next year's budget.
(b) Capital
(i) Property
If the client is a property owner the Receiver must ensure the property
is kept in good repair and all the outgoings are paid. If the property
is tenanted the Receiver will be authorised by the Court to collect
rents and manage the property. He can however employ an agent for
this purpose provided the Court of Protection has approved the rate
of fees charged. Where the client wishes to move, or if he is moving
permanently out of his property to take residence in a retirement
home, the Court of Protection will direct that the property should
be sold provided there is no likelihood of the client ever returning.
The Court of Protection will have to be provided with expert evidence
as to the proper market price of a property to be purchased or sold
and will have to approve the price before contracts are exchanged.
(ii) Shares
The Receiver must liaise with the Court of Protection with regard
to the investment of any capital. Investments are usually made by
the Court using one of two firms of panel stockbrokers. The Receiver
should inform the Court of any change of investment policy he considers
is needed. If the client already has his own brokers managing his
investments, the Court will need to approve the management agreement
if that firm is to manage the portfolio rather than the panel brokers.
7. Henmans acting
as Receiver
If a close relative needs considerable physical and emotional support,
it may be preferable to have a professional Receiver to look after
the financial side, leaving the family free to concentrate on the
care aspect. In some cases there is nobody suitable to act as Receiver,
or no-one can be found who is willing to carry out the duties of
a Receiver. In these circumstances, it may be appropriate for a
professional non-family member to apply for a Receivership. A partner
or senior solicitor from Henmans Private Client Department will
be pleased to meet with a client or their family to discuss the
possibility of acting on their behalf as a professional Receiver.
Henmans Private
Client Department is experienced in dealing with all aspects of
Court of Protection work. We have a team approach to managing a
client's affairs under a Receivership. Mrs Veronica Cowdrey, a senior
Associate in the firm specialising in Court of Protection work,
deals with the day to day aspects of a client's affairs consulting
the appointed Receiver on all matters requiring a formal decision
and guidance. The advantage of the team approach is that the client
and their family will always have access to someone who is familiar
with their affairs and can give a speedy answer to any queries.
Henmans have
considerable experience in making all applications to the Court
of Protection which may become necessary within the course of a
Receivership, for example selling and buying property for the client,
tax planning, gifts, settlements and Statutory Wills.
Henmans has
recently been appointed to the Public Guardianship Office's Panel
of Receivers. The Public Guardianship Office can ask a partner in
our Private Client Department to act as Receiver in cases that are
referred to them in circumstances where there are no suitable family
members. We also act as professional Receiver in cases referred
directly to us by a client's family. We have financial and record
keeping structures in place tailored for this type of financial
management.
The fees of
a solicitor who acts as Receiver are fixed by the Court of Protection
in consultation with the Law Society. They presently stand at £590
plus VAT per annum for general management and in addition £190
plus VAT for completing the Receiver's annual return. It is likely
that the amount of the "fixed costs" will cover the solicitor's
bill for work carried out in any year in most straightforward cases.
If professional costs amount to more than the fixed amount in any
year, due to the complexity of a case, the fees are assessed by
the Court of Protection before the bill can be finalised and paid
from the client's assets.
If you wish
to know more about Henmans Professional Receivership Services then
please contact Mrs Zandra Houston or Mrs Veronica Cowdrey at our
Woodstock office.Henmans
solicitors
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