Court of Protection and PI Trusts: Jargon Buster

Court of Protection – a specialist Court in England & Wales that can make decisions on behalf of people who lack Mental Capacity to make decisions for themselves. The Court is based in London and has regional hubs.

Mental Capacity – whether someone can make their own decision. The legal definition is set out in the MCA 2005 (Mental Capacity Act 2005). Under the MCA 2005, the starting assumption is always that a person has mental capacity. It is important to understand that capacity is both time and decision specific.

MCA 2005 (Mental Capacity Act 2005) – is legislation (laws) that provides a comprehensive framework to protect and empower people who may lack Mental Capacity to make their own decisions. The MCA 2005 has recently been amended in relation to procedures in accordance with which a person may be deprived of liberty where the person lacks capacity to consent by the Mental Capacity (Amendment) Act 2019.

Best Interests – the aim of this is to consider matters from the person without capacity’s point of view (i.e. what they would have wanted – bearing in mind that we cannot always have what we want) and other objective consideration (i.e. expert points of view), usually referred to as a balance sheet of factors. Section 4 of the MCA 2005 sets out a simple checklist of factors which must be applied in determining Best Interests. There is not a simple answer for Best Interest, as every decision is unique to the person and circumstances involved.

Court Order – an official declaration by a judge (or someone authorised by the Court) that is legally binding. There are different types of Court Orders but they can usually be split into 2 main categories – final and interim. Final orders are made at the end of the Court process and can include the appointment of a Deputy, authorisation of a PI Trust. Interim orders are made by the Judge during the Court process and can include limited authority, requests for further evidence, hearing dates and so on. Interim orders can sometimes also be called Directions Orders.

COP1 – the application form required to start proceedings in the Court of Protection, except for in some limited cases such as deprivation of liberty applications or discharge applications. The form must usually be accompanied by an application fee (currently £365).

Applicant(s) – person or persons applying to the Court of Protection. This may be the person applying to be Deputy or an existing Attorney or someone else.

Deputy/Deputies – a person (or persons) appointed by the Court of Protection to make decisions for someone who lacks Mental Capacity where there is no valid power of attorney in place. There are two types of Deputy – a Property & Financial Affairs Deputy and a Personal Welfare Deputy – please note that Ashtons Legal doesn’t offer Health and Welfare Deputyships. The Court rarely appoint Personal Welfare Deputies.

OPG (Office of the Public Guardian) – a government body that supervises and supports Deputies and Guardians appointed by the Courts. They also register lasting and enduring powers of attorney, maintain a register and look into reports of abuse by registered Attorneys, Deputies or Guardians.

Attorney(s) – appointed under an enduring power of attorney or a lasting power of attorney to make decisions on behalf of the person who set up the power, including when that person has lost Mental Capacity. Attorneys can be appointed for financial decisions and for health decisions.

Guardian(s) – appointed under a guardianship order by the Court of Protection to deal with a missing person’s property and financial affairs.

Official Solicitor – a specific government official who may be appointed by the Court of Protection to represent in the proceedings the person who does not have mental capacity. The Official Solicitor can only make decisions for the person within the proceedings and they are to protect and represent that person’s Best Interest in the proceedings.

PI Trusts

PI Trust (Personal Injury Trust) – also known as a Compensation Protection Settlement, this is a Trust set up by someone who has suffered a personal injury, to hold their compensation award.  This will enable the funds held in trust to be disregarded when that person is being assessed for means-tested benefits. If the person who suffered the personal injury lacks Mental Capacity to manage their own finances then the PI Trust may require the authorisation of the Court of Protection. The Court may suggest, in such circumstances that a Property and Financial Affairs Deputy is appointed instead.

Trust – an arrangement where certain people (Trustees) hold assets on behalf of other people (Beneficiaries), on particular terms and subject to certain duties.

Trustee – a person who is responsible for looking after the Trust Fund, on behalf of the Beneficiaries. The Trustees will have control of the Trust Fund and are responsible for making sure it is properly invested.  They can be either professionals or laypeople (such as trusted friends or family).

Settlor – the person who provides the funds to set up a Trust.  In the case of a PI Trust, this is the person who suffered the injury and was awarded compensation.

Beneficiary – a person who has a right, or a potential right, to benefit from a Trust.  In the case of a PI Trust, this will usually be the person who suffered the injury.

Trust Fund – this is the assets that are held on a Trust.  It can be cash, or a house, or investments, for example.

Trust Deed – the document legally establishing a Trust, which will appoint the Trustees, identify the Beneficiaries, set out the terms on which the Beneficiaries can benefit from the Trust Fund, and set out some of the Trustees’ powers and duties.  However, in addition to anything in the Trust Deed, the Trustees will also have other powers and duties set out by statute and case law.

Bare Trust – this is a type of trust in which the Beneficiaries are fully entitled to the whole income and capital of the Trust Fund. In a Bare Trust, the Trustees are effectively just holding on to the Trust Fund for the Beneficiaries.  A PI Trust can be a Bare Trust, and this is usually the most straightforward option.

Financial Advisor – someone qualified to advise on financial decisions, such as how the Trustees should invest the Trust Fund.  A lawyer is not allowed to give this kind of advice, but may be able to put you in touch with a Financial Advisor.