Managing the Finances and Welfare of Incapable Adults

3. POWERS OF ATTORNEY

Introduction

3.1 The general principles which should underlie new legislation to deal with the affairs of incapable adults include the principle that the present or past wishes of the adult should be taken into account. It is entirely consistent with that principle that an adult should be able to make plans for his or her own future by granting a power of attorney to a person of his or her choice, exercisable in the event of incapacity. However, it is necessary to balance the simplicity and essentially private nature of the appointment of an attorney with the need to protect increasing numbers of adults who may appoint an attorney when capable, but subsequently become incapable and vulnerable to abuse of the attorney’s powers. This Part discusses possible changes in the law concerning powers of attorney, with a view to securing that balance.

Present law

3.2 At present anyone with legal capacity can grant a power of attorney to another legal person. The instrument of appointment may be registered in the Books of Council and Session on payment of a fee. This, however, confers no additional formal validity on the instrument. There are no tests applied before registration to ensure the validity of the grant. Powers of attorney may vary in their terms but they will normally enable the attorney to exercise legal capacity on behalf of the granter in financial or property transactions. Under changes made to the law in 1990, powers of attorney continue after the granter’s incapacity unless the document granting them excludes this.

Recommendations of the Scottish Law Commission

3.3 Powers of attorney are dealt with in Chapter 3 of the SLC report. The main defects of present arrangements for powers of attorney are, as the SLC sees it, that:

3.31 attorneys are unsupervised and there may be no-one with sufficient interest to monitor and if necessary challenge the attorney’s actions;

3.32 the court’s powers are limited to superseding the attorney by a curator bonis;

3.3.3 continuing powers of attorney may be conferred inadvertently or inappropriately by failure to exclude the provisions of section 71 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990;

3.34 the competency of appointing attorneys to exercise welfare powers is unclear in Scots law.

3.4 Although the Commission regards the lack of supervision as a defect, in fact its recommendations do not include routine supervision of attorneys. Their basic proposals are, rather, for

3.4.1 powers of attorney to continue on incapacity only if the granter expressly so provides (and repeal of section 71 of the 1990 Act);

3.4.2 registration of powers of attorney on a public register;

3.4.3 setting of criteria for registration to protect the granter, rather than automatic registration as at present;

3.4.4 an express provision for the appointment of attorneys with welfare powers to be exercised only on the incapacity of the granter;

3.4.5 no statutory requirement on attorneys to act or to keep records (except where required by the court), but a Code of Practice for Attorneys to be made available on registration;

3.4.6 investigation of complaints by appropriate public authorities;

3.4.7 supervision by appropriate public authorities where ordered by a court;

3.4.8 possible co-existence of attorney and guardianship.

3.5 The Commission envisage that the registration authority will be The Public Guardian i.e. the Accountant of Court with an expanded role. The Public Guardian would have an investigatory and supervisory role (if so ordered by a court) in relation to continuing powers of attorney while the investigatory and supervisory role would fall to the Mental Welfare Commission and the local authority for welfare powers of attorney.

Assessment of proposals

Powers of attorney to continue on incapacity only if the granter expressly so provides

Recommendation 17

(1) A person having a power of attorney granted after the commencement date of legislation implementing our recommendations should have the power to act after the granter's incapacity only if the contract of mandate or agencyconferring the power of attorney clearly shows that that was the granter's intention.

(2) There should be no style prescribed for conferring a power of attorney which is to have effect after the granter's incapacity.

(3) Section71 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 should be repealed with respect to powers of attorney granted on or after the commencement date of legislation implementing our recommendations.

Accept

Recommendation 18

A contract of mandate or agency conferring a continuing or welfare power of attorney should be required to be in a written document and subscribed by the granter in order to be formally valid.

Accept

Recommendation 19

In order to be formally valid a document conferring a continuing or welfare power of attorney should:

(a) contain a certificate by a solicitor (or a member of some other class of persons to be prescribed by the Secretary of State) that, after interviewing the granter and obtaining any necessary reports, he or she is satisfied that the granter understood the nature and effect of the document, and

(b) contain a certificate by a solicitor or other certifying person that he or she has no reason to believe that the document was being signed as a result of anything which would vitiate the granting of the power.

Accept with modification

3.6 The Government are prepared to accept the SLC’s conclusion in recommendation 17(2) that section 71 of the 1990 Act should be repealed and that continuing powers of attorney should only be available if expressly provided for. This would safeguard the interests of a person who appointed an attorney for a temporary purpose such as to cover a period abroad. To this end the Government would propose that only continuing powers of attorney would require registration under the new arrangements (see below). Those which were intended to be temporary could still be registered in the Books of Council and Session.

Registration

3.7 The Government accept that more safeguards are needed for the appointment of continuing attorneys than are at present available. The Government would propose a public register. A public register would, for example, make it possible for those with an interest to identify possible abuse through, for example, the identification of persons holding multiple powers of attorney. The setting up of a public register by the Public Guardian would appear to the Government to be the appropriate way forward, subject to the availability of resources.

3.8 The Government propose that the criteria for registration should include certification that the granter understood the nature and effect of the document, and that there is no reason to believe that the document was signed as a result of anything that would vitiate the granting of the power. The Government would be able to prescribe in secondary legislation a class of persons whose certificates to that effect would be acceptable. The Government also consider that the grant should not be registered unless the Public Guardian is satisfied that the attorney accepts the appointment.

Recommendation 21

(1) The Public Guardian should set up and maintain a register of documents conferring continuing or welfare powers of attorney.

(2) The Public Guardian should not be required to register a document conferring continuing or welfare powers of attorney unless the document appears to comply with the requirements of Recommendations18 and 19 (signature by granter and certification of granter's understanding and absence of vitiating factors) and he or she is satisfied that the attorney accepts the appointment.

(3) The register should be open to inspection by any member of the public. On registration the Public Guardian should give a copy of the document to the attorney or other ingiver with a certificate of registration and also send a copy to the granter and, if the document requests this to be done, to up to 2other specified individuals.

(4) A continuing or welfare attorney should have no authority by virtue of the power or attorney until the document conferring such a power is registered with the Public Guardian.

(5) Once the document conferring the power has been registered the Public Guardian should be notified of any permanent change of address of the granter or continuing or welfare attorney or the death of the granter.

(6) The Public Guardian should be required to investigate complaints made about the actings of continuing attorneys and alert the competent authorities in order to prevent further abuse. The Mental Welfare Commission and the local authority should have similar functions in relation to welfare attorneys.

(7) A power of attorney conferred after the commencement of the new legislation otherwise than in accordance with our recommendations should lapse on the granter's incapacity.

Accept

Recommendation 22

Where the terms of a document conferring a continuing or welfare power of attorney prohibit registration until the occurrence of a specified event, the Public Guardian should not register it unless satisfied that the event has occurred.

Accept

3.9 Recommendation 21(6) deals with investigation of complaints about continuing and welfare attorneys. That recommendation is discussed more fully in paragraphs below.

Welfare power of attorney

3.10 The detailed recommendations concerning welfare powers of attorney are set out below. The Government wishes to consult further before reaching a view on these.

Recommendation 20

(1) A welfare attorney should be permitted to exercise welfare powers

notwithstanding his or her bankruptcy or the bankruptcy of the granter.

(2) Welfare powers under a welfare power of attorney should be exercisable only by individuals.

Recommendation 23

A welfare attorney should not be entitled to exercise a welfare power contained in the document conferring the power of attorney unless the granter is incapable of making a decision regarding the welfare matter in question, or the attorney reasonably believes the granter to be incapable.

Recommendation 24

(1) A welfare attorney should not be entitled to place the granter in a hospital for treatment of mental disorder against the granter's will. However, the welfare attorney should, if the power of attorney confers such powers, have the same rights in relationto detention as the granter's nearest relative has under theMental Health (Scotland) Act 1984

(2) A welfare attorney should not be entitled to authorise any of the prescribed treatments in Recommendations59 to 64 or consent to the adult being restrained. [See Part 6 below].

Comments of consultees required on whether to accept

Issues for consideration

3.11 The Government believe that for many incapable adults who have family support, decisions about their welfare are made on a day to day basis by relatives caring for them without any formality. Where difficulties arise, these are likely to be in the area of financial or property transactions, where, for example, the carers cannot make the best decisions in the interests of the incapable adults because they have no right to intromit with the person’s funds or other assets. The Government would wish to encourage so far as possible voluntary and informal caring arrangements for incapable adults. The Government are concerned that the statutory definition of a welfare power of attorney may in practice inhibit such arrangements. For example where more than one relative was involved in caring for the adult, but only one carer had welfare power of attorney, the resolution of disputes might become more difficult without formal steps. There would also be a risk that few individuals would wish such a formal role knowing that they could be open to investigation by the Mental Welfare Commission, and to possible supervision on the order of a court.

3.12 While the Commission recommends that welfare powers of attorney should only be held by individuals, the recommendations do not preclude such an individual being a professional such as the granter’s social worker or nurse. While in practice such a person may be taking a number of day to day decisions about the adult’s welfare, it is not clear whether this would be a satisfactory arrangement since nursing staff and social work caseworkers are liable to change. If welfare powers of attorney are to be defined, it might be more logical to enable them to be held by chief professional officers or institutions as well as individuals.

3.13 Other concerns about welfare attorneys centre on the SLC’s recommendation that welfare powers should only become exercisable on the granter’s incapacity. However this might not be clear cut. Some adults go through periods of greater or lesser confusion of thinking before incapacity can be unambiguously diagnosed. The SLC appear to envisage circumstances in which a third party (perhaps a health professional) might disagree with the welfare attorney that the granter was incapax, and decide to deal with the granter direct. In such circumstances the welfare attorney’s position would be no better than that of the informal carer. The welfare attorney’s status might, however, be made more secure if there were an objective test of incapacity and if the event of incapacity was required to be registered before the powers could be exercised. However this in turn would create difficulties if, for example, a cure was found for the incapable adult’s condition leading to his or her regaining capacity.

3.14 To assist the Government in further consideration of these issues, it would be helpful to have comments from consultees on the following questions:

3.15 A possible middle course between the SLC’s recommendation and the present state of the law might be to make it clear in statute that an attorney may exercise welfare powers, but not to allow for the appointment of separate attorneys with continuing financial powers, and welfare powers respectively. In appointing an attorney, the granter would generally confer powers to enter into financial and property transactions, but could also specify that welfare powers could be exercised on his or her incapacity. This would reduce some of the scope for conflict between attorneys, but would not address all the problems identified above.

Code of practice

3.16 In recommendation 25, reproduced below, the SLC propose the preparation and publication of a code of practice for continuing and welfare attorneys, rather than that they should be monitored or supervised as a matter of course by the Public Guardian, Mental Welfare Commission or local authority.

Recommendation 25

(1) Continuing and welfare attorneys should not be monitored or supervised either by the Public Guardian, Mental Welfare Commission or local authority except where a court order is made to this effect under Recommendation26. This should be without prejudice to the existing and recommended investigative and protective functions of the Public Guardian, Mental Welfare Commission and local authority.

(2) The Secretary of State should prepare and publish a Code of Practice containing guidance to continuing and welfare attorneys as to the exercise of their functions.

Accept subject to views of respondents

Comment

3.17 The Government agree that a code of practice would be useful. This would be developed and published by the Secretary of State, in consultation with other interested bodies.

3.18 The Government accept that the framework for attorneys should not be excessively onerous. The obligations on the attorney should be those freely entered into as a matter of contract between the granter and the attorney and it is consistent with this principle that the attorney should not be under a duty to act.

3.19 The Government are less certain that the attorneys should not be required to keep records. There would be serious difficulty for the authorities in carrying out investigations if no records have been kept (see below).

Investigation

3.20 The SLC report proposes (in Recommendation 21(6) - see paragraph 3.6 above for the text) that the Public Guardian should have the role of investigating complaints about continuing attorneys, while the Mental Welfare Commission or the local authority should have the role of investigating complaints about welfare attorneys. Each body should be able to carry out investigations of suspicious circumstances even without a complaint. These roles would be new, in that attorneys are not subject to investigation at present and welfare attorneys as such do not exist. There would be a resource burden on the bodies concerned. The Public Guardian i.e. the Accountant of Court, does not at present have any statutory duties concerned with attorneys so new resources would have to be found to enable him to develop this function. The local authorities and the Mental Welfare Commission already have involvement with the affairs of most incapable adults through the provision of social services, so the additional burden on them would perhaps be incremental rather than entirely new.

3.21 The Government are concerned about the SLC’s proposals for investigative powers for a number of reasons:

3.21.1 openness to investigation even without a complaint might make attorneys less willing to accept appointment to what is essentially a voluntary and private function. This would apply especially to welfare attorneys who would normally be unpaid individuals;

3.21.2 investigation may be ineffective without records being kept by the attorney. This calls into question the SLC recommendation that accounts/records should not be required except by order of a court;

3.21.3 the proposal for investigation of complaints by the 3 public authorities, or investigation of suspicious circumstances even without a complaint, may err too much on the side of protection of the granter in what is a private and voluntary arrangement.

3.22 There is a possible modification of the SLC’s proposals that would lead to a less onerous system for the public authorities and for attorneys, while still providing a measure of protection. This would be to provide that investigation by the Public Guardian, the Mental Welfare Commission or the local authority could only be instigated by court order. Such an order could be made on application by any person having an interest, but the court would have to consider the complaint, and the attorney’s answer, before ordering the investigation. It is, of course, already possible for anyone who wishes to challenge the actings of an attorney to do so before the courts, so the burden on the courts might in practice not be much greater than at present. The disadvantage of such a proposal is that it would be less user friendly and more expensive for the person wishing to mount a challenge.

Supervision by public authorities when ordered by a court

2.23 Recommendations 26 to 32 set out the very detailed recommendations relating to the powers of the court to make orders relating to continuing and welfare attorneys, and to order their supervision by public authorities. The texts of the recommendations are as follows:-

Recommendation 26

In order to better protect granters of continuing or welfare powers of attorney, the court should have the power, on application by any person claiming an interest in the granter's welfare or finances, to make various orders relating to the attorney. The power should be exercisable only if the court is satisfied that the granter is incapable of giving directions to the attorney or of safeguarding his or her own interests in relation to the matters covered by the power of attorney and that the making of the order is necessary to safeguard the granter.

Accept

Recommendation 27

The court should have the power under Recommendation26 to order a continuing attorney to produce accounts of his or her transactions with the granter's estate. Accounts should be ordered in respect of all or any of the period from the date of registration of the document conferring the continuing power to the date of the order. The accounts should be audited by the Public Guardian and the accounts and audit report thereafter lodged in court.

Accept

Recommendation 28

The court should have power under Recommendation 26 to order that a continuing attorney should in future be subject to such supervision by the Public Guardian as it thinks fit.

Accept

Recommendation 29

(1) The court should have power under Recommendation 26 to order a welfare attorney to produce a report as to how any welfare powers have been exercised in all or any of the period between registration of the document conferring the welfare power and the date of the order.

(2) As a result of the report or otherwise the court should have power to order the welfare attorney to be subject in future to such supervision by the local authority in respect of any welfare powers as it thinks fit.

Accept

Recommendation 30

The court should have power under Recommendation26 to give directions to a continuing or welfare attorney as to the exercise of his or her functions.

Accept

Recommendation 31

The court should have power under Recommendation26 to revoke a continuing or welfare attorney's appointment (including one or more joint attorneys or a substitute attorney) and to revoke in whole or in part the continuing or welfare power of attorney.

Accept

Recommendation 32

The court should not have power to vary the terms of a contract of mandate or agency

Accept

Resignation or termination of powers of attorney

3.24 The SLC report made certain recommendations concerning the resignation or termination of continuing or welfare attorneys. These are given below.

Recommendation 33

(1) In order to prevent a lapse in arrangements made for the safeguarding of the granter's welfare and financial affairs a continuing or welfare attorney acting under a registered power of attorney should have to give notice of his or her intention to resign to the granter, the Public Guardian, the granter's primary carer, and, if the local authority was supervising the attorney or a guardian had been appointed, also to the local authority or guardian.

(2) The resignation should become effective 28days after notification to the Public Guardian. But where the attorney's resignation would still leave at least one continuing or welfare attorney (joint or substitute) in post the resignation should be effective as soon as the Public Guardian is satisfied that the remaining joint attorney(s) will continue to act or the substitute attorney is willing to act.

Accept

Recommendation 34

(1) The appointment by the granter of his or her spouse as continuing or welfare attorney should be revoked automatically by a decree of separation, divorce or nullity relating to the granter and his or her spouse, unless thegranter provides otherwise in the contract of mandate or agency conferring the continuing or welfare power of attorney.

(2) Where a guardian is appointed with certain powers the authority of a continuing or welfare attorney in relation to matters within the scope of those powers should automatically terminate.

Agree subject to previous comments

3.25 Subject to previous comments on registration, powers of the Public Guardian etc., the Government broadly agree that there should be provisions based on the above relating to the resignation and termination of powers of attorney.

Co-existence of attorney and guardian

3.26 The SLC envisage that in certain circumstances the court may appoint a guardian for some purposes while leaving the attorney’s powers in place for others. The Government would accept that this option should exist.

Private International Law

3.27 Recommendations 35 and 36 (reproduced below) concern aspects of Private International Law. The Government accept the need for these provisions.

Recommendation 35

Subject to Recommendation36 the effect during the granter's incapacity in Scotland of a mandate or agency conferring a continuing or welfare power of attorney (however expressed) should be determined according to the proper law of the mandate or agency.

Accept

Recommendation 36

The following recommendations in Part3 relating to Scottish continuing or welfare attorneys

(a) Recommendation23 (welfare powers exerciseable only during granter's incapacity),

(b) Recommendation24 (welfare attorney not to place granter in hospital for treatment of mental disorder against granter's will),

(c) Recommendations26-31 (various court orders relating to continuing or welfare attorneys), and

(d) Recommendation34(2) (appointment of guardian terminates authority's authority in so far as powers coincide).

Accept