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GUEST ARTICLE: Mental Incapacity And Private Clients - The International Dimension

Naomi O’Higgins, Howard Kennedy, Partner , 5 September 2016


Problems associated with an ageing population are escalating at a significant rate, creating challenges for individuals with complex international affairs, as well as for their carers, families, trustees and advisors.

One of the most difficult and sensitive issues facing private client advisors is how to help clients and relations dealing with issues around mental incapacity. As lifespans increase and afflictions of old age take their toll, these become more pressing concerns, despite advances in medicine and science. Diseases such as Alzheimer’s, for example, are only too familiar to people with aged relations and friends (although such conditions are not just for those who are particularly old). Here, Naomi O’Higgins, a partner in the private client team at law firm Howard Kennedy, takes a look at this topic of mental incapacity, going through some of the startling statistics and facts. The editors of this publication are pleased to share these insights and invite responses.  

The average age of the population continues to increase as more people live longer. The UK Office for National Statistics (2013), the official data gatherer for the country, projects that, for England, from 2012 to 2023: 
- Overall population will grow from 56.5 million to 57.7 million; 
- The number of people aged 65 plus will grow from 9.1 million to 11.3 million; 
- The number of people aged 85 plus will grow from 1.2 million to 1.8 million; 
- The number of centenarians will more than double from around 11,600 to over 27,400; 
- More than 225,000 are diagnosed with dementia each year, and the number of sufferers is expected to reach 1 million by 2025.

Problems associated with an ageing population are escalating at a significant rate. These forces, together with the increase in globalisation, with individuals based in more than one country and having assets and real estate across a number of jurisdictions, create challenges not only for the individuals themselves, but also for carers, families, trustees and advisors. 

Powers of attorney
Although there are options available for dealing with an individual's property and affairs after they have lost mental capacity, it is best for individuals, particularly those with complex and/or multi-jurisdictional assets, to put provisions in place whilst they have capacity to do so. This can be done by appointing an attorney with authority to deal with their property and affairs if or when they lose capacity. In England and Wales, this task is done by making a “lasting power of attorney”.  

An adult who is habitually resident in a country other than England and Wales but who has a connection to this jurisdiction can make a lasting power of attorney specifying that they want English law to apply. If they do not make any such specification, then the law of the country in which they were habitually resident at the point of making the power will apply.  

A foreign power of attorney is automatically effective in England and Wales if it satisfies the requirements of the local law. However, in order to avoid future difficulties, it is advisable to obtain a letter from a local lawyer in the jurisdiction where the power was made that confirms its validity to ensure it will be accepted here. A general rule is that powers of attorney are governed by the law of the country where exercised, so if a foreign power of attorney was used in this jurisdiction any questions to be determined in relation to its exercise will be a matter for the courts here.  

The court of protection
In the event that no arrangements are in place when capacity is lost or there is a dispute or query regarding those arrangements, the COP is the court, in England and Wales, which makes decisions on financial and welfare matters for people who lack mental capacity to make decisions at the time they need to be made. It can make an extensive range of decisions in relation to a person who lacks mental capacity and its decisions are made on the basis of the best interests of the incapacitated person. The majority of the cases before the COP relate to the property or welfare of people who are habitually resident in England and Wales. However, the COP is called upon increasingly to make decisions for incapacitated adults with a foreign connection.  

The COP’s reach
The Mental Capacity Act 2005 (MCA) provides the legal framework for deciding issues relating to mental capacity in England and Wales. Although the UK has signed the Convention on the International Protection of Adults, it has not been ratified in England and Wales but has been implemented indirectly as Schedule 3 of the MCA (with some differences). The convention has been ratified in Scotland.

Part two of Schedule 3 sets out when an English court can exercise its functions under the MCA.  

The English and Welsh Courts will have full jurisdiction to make declarations and/or decisions in respect of a person who lacks capacity in the following circumstances: 
(a) in relation to a person who lacks capacity who is habitually resident in England and Wales;
(b) in relation to property in England and Wales of a person who lacks capacity (wherever habitually resident); and
(c) in relation to an adult who is not habitually resident in England and Wales but who is present there if (i) the matter is urgent or (ii) the measure is temporary and limited in effect to England and Wales.

Where the COP exercises its jurisdiction, any decisions made for or on behalf of a person must be made in their "best interests". This can be contrasted to the Court of Protection's role where an adult is habitually resident in a foreign jurisdiction. In those cases the court does not consider what is in that adult's best interests but rather its role is a procedural one.  

Habitual residence
Before turning to the court's more limited jurisdiction in relation to persons habitually resident outside England and Wales, it is helpful to consider what is meant by the term "habitually resident". This question has been considered in a number of cases, but in essence it is a question of fact to be determined in the individual circumstances of the case. The court will consider, in particular, the conditions and reasons why the person is resident in a particular jurisdiction, the duration of that residence and other factors pointing to their presence not being temporary or intermittent. The COP has ruled that wrongful removal is not effective to change habitual residence (for example in circumstances where a person lacking capacity was abducted). However, habitual residence can be lost and/or acquired informally.  

Recognition, enforcement of foreign protective measures
The COP has jurisdiction to recognise and enforce foreign protective measures. A protective measure is a measure directed to the protection of the person or property of an adult (a person over 16 for these purposes) who as a result of an impairment or insufficiency of their personal faculties, cannot protect their interests. The appointment of a guardian or equivalent by the relevant authorities in a foreign jurisdiction can also be a protective measure.  

Where a protective measure has been taken in relation to an adult who is habitually resident outside England and Wales, any interested person can apply to the COP for a declaration that it be recognised in England and Wales. Any recognition application should also be accompanied by an application that the measure be declared enforceable here as well. This will mean that the foreign protective measure is enforced in England and Wales as if it were a measure taken by the Court of Protection.  

The Court of Protection has discretion to decline to recognise a protective measure in certain circumstances where, for example, the adult was not given an opportunity to be heard, recognition of the measure would be manifestly contrary to public policy or a mandatory provision of the law of England and Wales. However, the COP’s powers to review the underlying merits of the foreign measure are limited and the best interests of the incapacitated adult are not considered. 

In an ideal world, those with complex assets who are based in a number of jurisdictions are advised to make provision in the event that they lose mental capacity. In the event that this is not possible the COP has jurisdiction to make orders in relation to the property and affairs where the person is habitually resident in England and Wales or has property here as well as more limited powers to recognise and enforce foreign protective measures. 

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