Scottish Sheriff Court Decisions

AW259/08

Application in respect of JG

Estate Planning for Adults who have lost Capacity

In three previous cases, I have commented on the use of Intervention Orders, as defined by section 53 of the Adults with Incapacity (Scotland) Act 2000, to regulate the affairs and estate of a person who is an adult with incapacity as defined by that Act.

In B Applicant 2005 SLT (Sh Ct) 95, I authorised the taking of steps to secure the obtaining of compensation for an adult due to her in terms of an action raised by her now deceased husband. In T Applicant 2005 SLT (Sh Ct) 97, I authorised the solicitor of an adult to execute a codicil to her will in circumstances where the necessity to correct a difficulty created by the wording of the original testamentary provision had arisen, and in M Applicant 2007SLT (Sh Ct) 25, I authorised the children of an adult to renounce his legal rights in the estate of his deceased wife, in circumstances which were there justified.

In all of those cases, the order sought was an Intervention Order, and in all of them, the important provision of section 53 which was commented upon was subsection 9, by which it is provided that "Anything done under an intervention order shall have the same effect as if done by the adult if he had the capacity to do so". In the first two of those cases, I specifically commented with approval on the passages in Chapter 10 of Mr Adrian Ward's standard text on the subject "Adult Incapacity" (W Green/Sweet & Maxwell 2003) and in the third case I did so by inference.

 

The Present Circumstances

In this case, an application was presented seeking to appoint a solicitor in practice in Glasgow to be financial guardian to an adult who had lost capacity; i.e. this was an application for guardianship under section 57, and not merely for intervention under section 53.

The adult concerned is a gentleman aged 82, in respect of whom a separate application for welfare guardianship has already been granted, is clearly (as evidenced by appropriate certificates) an adult with incapacity as defined by the Act, and has the need for substantial and continuing management of his property and affairs. Benefit to him overall will be achieved by the intervention, and that cannot be achieved without it. He has required to live in residential accommodation for some time, yet is the heritable proprietor of a house, to which he can no longer return, and which is lying unoccupied and deteriorating. He also has savings and both state and occupational pensions. The house he owns needs to be sold, and the net proceeds and the rest of his capital and income will have to be ingathered and invested properly in order to help care for him. The total value of his estate is not insubstantial.

The application accordingly sought, and properly so, plenary financial powers under section 64(1)(d) of the Act, together with certain specific financial powers under section 64(1)(a) of the Act, including the power to take all steps necessary to sell the house and invest the free proceeds., the power to make gifts, and the power to execute a new will on his behalf.

It transpired that the adult had made a will in 2004, when he still had capacity to do so. In that document, he had intended to regulate the succession to his estate after his death, but a copy of it was in the possession of the person who was intended to be the principal beneficiary, and it was realised that there had been a mistake made in designing the proposed principal beneficiary, so that it appeared that the intended beneficiary would not succeed at all.

Accordingly, following the line taken in the previous cases I have referred to, and in obedience to the suggestions contained in Mr Ward's textbook to that effect (paras 10-33 and 10-34), an application was made in the present case to authorise a codicil to be added to the will, correcting the error and making it clear who was intended to be the principal beneficiary.

Guardianship as Opposed to Intervention

Before dealing with the factual situation, it is necessary to deal with such a proposal in the context of Guardianship, rather than by way of an Intervention Order, which has been the situation in all three of the previous cases I have referred to. Had there been the need only to deal with the problem with the will, that could have been dealt with by granting an Intervention Order, but of course here there is the need for continuing financial management.

In his book Mr Ward, at paras 10-30 and 10-38, discusses how a Court may approach a combination of orders. He suggests that rather than simultaneously grant a guardianship order and an intervention order, sheriffs will more likely grant guardianship (under section 64(1)(d)) and include a specific order under the term of section 64(1)(a), i.e. to confer on a guardian "power to deal with such particular matters in relation to the property [or] financial affairs...of the adult as may be specified in the order",( but it would be competent to grant both a plenary guardianship order and an intervention order for a specific power at the same time). Section 64(1)(d) empowers the court to confer on the guardian "power to manage the property or financial affairs of the adult, or such parts of them as may be specified in the order".

At paragraph 10-38, Mr Ward opines that powers to deal with matters in category (a) will generally be combined with powers in categories (b) and/or (d), because if there were no other need for guardianship, the matter could be dealt with by way of intervention order, and that conversely, if there was a need for ongoing guardianship, (which there is here), then the existence of category (a) indicates that it is to be preferred to a separate intervention order granted in parallel with the guardianship order.

So, in principle then, the power sought in this case in regard to the adult's will could have been granted if sought in a separate intervention order, but since this was a case where there was, and is, a need for general financial guardianship under the terms of section 64(1)(d), then it is equally appropriate to ask for the power to be given to the appointed guardian as a specific power under the terms of section 64(1)(a). It also follows that the comments made by Mr Ward, at para 10-34, about the need to test the limits of what is permissible under intervention orders, and approved by me in the previous cases mentioned, also apply, mutatis mutandis, to powers sought as a specific part of a financial guardianship order, as here.

It is correct that there is in the guardianship sections of the Act no provision equivalent to the terms of subsection 9 of the section on intervention orders, but there does not require to be, owing to the mercifully general way in which the powers which can be granted under section 64 are framed. None of the matters which a guardian is excluded from doing, as set out in section 64(2), arise here. There is a provision (section 64(11)) which allows Ministers to define the scope of the powers which may be conferred and the conditions under which they shall be exercised, but so far, no such attempt has been made. This Act is therefore largely free of the sort of over-prescription which characterises other Acts of the Scottish Parliament, and of course all orders granted under it must satisfy the test of the general principles set out in section 1, which are satisfied here.

The Power to make Gifts

The adult was a widower, and had had only one son, who, tragically, had also pre-deceased him. His son's widow, the adult's daughter-in-law, survives, and she has two daughters, who are the adult's grandchildren. There is no other family, and accordingly his daughter-in-law and two grandchildren are the only relatives the adult has. It is clear that he was a doting grandfather and was in the habit of making quite substantial annual presents at Christmas to both grandchildren. I was shown information from his bank which vouched that, and have other information to the same effect. It is also the case apparently that he had promised his elder grand-daughter that when she passed her driving test, he would buy her a small car.

All of that, of course, amounts to the regular practice of making gifts. Many grandparents do so, and if they lose the capacity to continue that practice, then the recipients would lose the right to benefit from the generosity of the donor. Accordingly, the Act allows for a guardian to continue to make gifts out of the adult's estate, if authorised to do so by the Public Guardian (section 66). In the present case, the power to continue to make such gifts was specifically sought, and being satisfied on the basis of the material before me that it was appropriate to do so, I granted that power.

The Problem with the Will

It is always to my mind advisable that a person appointed to be a financial guardian, particularly where there is a power sought to sell heritage, seeks to have disclosed the contents of any will made by the adult. Circumstances may dictate that such a power should be sought on an interim basis. Prudent financial planning which may involve the sale of heritage can only fully take place if it is clear that there are no existing contradictory or competing testamentary intentions. Most often, a power to have disclosed any existing will is sought in applications for plenary financial powers. In the present case, as I have said, its contents were already known, but for the reasons I will now detail, the power was still sought to have access to confidential information about the adult's will, and the circumstances in which it came to be in the form it was.

It appears to be the case that in July 2004, the adult gave instructions to a firm of solicitors to draw up a will for him. In this case I did grant the applicant for guardianship an interim power to recover otherwise confidential information in relation to the making of the will, but despite requests by the guardian, and despite having the power to recover it, no file or any other document has been produced. There appears not to be a file. The firm of solicitors concerned has indicated to the guardian that their clients are given the option to make a payment for their will, wherein they have the option to select their own executors and solicitors, or to have a will made with no charge and where the principal of the firm is appointed executor and the client guarantees the firm the executry work. The will made in the present case followed the latter course.

I regret to say that when I first saw the document which purports to be a professionally drafted will, I indicated immediately to the guardian that merely making one correction would not suffice. I came quickly to the view that the whole document needed to be re-written.

Although the document does contain bequests, it is in a format which is unusual. The testator has subscribed on a sheet describing him as a "Deponent" and although his signature bears to have been witnessed by a person who is described as a "Legal Assistant", I cannot believe that that document was ever read by anyone with legal knowledge or training. The major flaw is that it completely misnames the adult's daughter-in-law, to whom the whole residue of his estate, which is quite substantial, is meant to be left. Aside from the matters I have drawn attention to, there are in a short 2 page document another 16 mistakes. Perhaps the most puzzling clause is that which empowers the "executors" (plural - despite the fact that there is only one) to continue holding "so long as they think proper all or any of the investments howsoever doubtful and hazardous held by me at my death".

In the event, I have now authorised the appointed guardian, who is a solicitor, but in a wholly different firm from that which drew up the original will, to execute a will on behalf of the adult in accordance with his past wishes and feelings as evidenced by the content of the document signed in July 2004. At least it was possible to ascertain what his intentions were, albeit imperfectly expressed.

Management of Estates

At the end of the case of T Applicant (supra), I expressed a view that it may be necessary for practitioners to seek permission from the courts to alter provisions in existing wills, where the testator has lost capacity to take such steps. That is what I authorised there, and in the present case I have now authorised the complete re-writing of a will, based on the known intentions of the testator, imperfectly expressed.

I have not yet been asked to authorise the making of a will on behalf of an adult who does not have capacity to do so, and who has not previously made one, but where the exercise of prudent estate planning might warrant it. It might not be easy to establish what the adult's testamentary intention would have been, but I cannot see any reason in principle why that should not happen, provided, again, that the application satisfies the general principles laid out in section 1 of the Act

It has been possible to do so in England for some time, as Mr Ward points out at p186 (fn 40). Under the provisions of the Mental Health Act 1983, the Master of the Court of Protection, or any other nominated judge, could secure the doing of all things necessary for the maintenance or other benefit of a patient or other members of his family, including, (section 96(1)(e)), the execution of a will making any provision which could be made by a will executed by the patient if he[had the capacity to do so].

I await such an application.