This publication is running a series of features and articles examining a range of issues joined by the common theme of "protecting the client". Guarding clients' interests goes far wider than managing investments and tax. And one such task is dealing with clients who suffer from cognitive impairment. How does this work in an offshore context?

This publication has written several times about what wealth managers should consider if or when a client suffers from cognitive decline. And the topic works out in various ways, for instance when cross-border assets and business affairs are involved, which can create questions about how different legal systems do or do not interact. As populations age, this is a major concern, especially at a time of large inter-generational wealth transfer.

These questions also sit under the general topic that this publication is addressing this month - “protecting the client”. Guarding the interests of clients is much more than about maximising investment portfolios or negotiating the reefs and shoals of tax codes, it is also about health and wellbeing, mental as well as physical. And mental capacity is a touchy subject which many families are uneasy about discussing. 

Paula Fry, senior associate in the private clients team at offshore law firm Appleby, addresses how such issues play out in Guernsey. The editors are pleased to share these insights and invite readers to respond. The usual editorial disclaimers apply. To comment, please email tom.burroughes@wealthbriefing.com or jackie.bennion@clearviewpublishing.com 

Losing mental capacity can happen for a number of reasons, including injury, illness such as Alzheimer’s disease or age-related cognitive decline. Regardless of the circumstances, dealing with such incapacity can be a troubling time for both the individual concerned and their family.

This short article explores the steps that a person may take under current law and proposed law in respect of his or her financial affairs and personal welfare in the event that they lose mental capacity at some point in the future.

Current position in Guernsey
 

Powers of attorney and mental incapacity
At present, where a person lacks capacity to deal with their affairs, the Royal Court may be asked to make a one-off decision in relation to a specific issue or to place the person under curatelle (customary law guardianship). Under curatelle, a curateur (or guardian) is granted the responsibility of dealing with the patient’s estate under the guidance and support of a family council which ordinarily comprises the closest family or friends of the patient.

An appointed guardian is given the role of managing and administering the property of the patient in a prudent manner. By and large the guardian may deal with the patient’s assets in any way that they see fit, save that they may not sell or charge any real estate of the patient without making a further application to the Royal Court.

Although it is possible for an individual to grant a power of attorney under Guernsey law to enable somebody else to deal with their affairs, such power lapses on any supervening mental incapacity on the part of the grantor. The proposed legislation will address this.

Living wills
The idea of a Living Will is to enable an individual to express the type of healthcare treatment that he or she would wish to receive should they ever be in an irreversible condition and unable to speak for themself.  It empowers the individual to participate in decisions about his or her own treatment and takes the decision-making away from family members.

Currently, there is some uncertainty in Guernsey over the legal enforceability of Living Wills (also known as Advance Directives) regarding treatment of a patient. The proposed legislation will also address this.

Proposed law
The Capacity (Bailiwick of Guernsey) Law, 2019 (Law) will provide a legal framework to support people over the age of 16 years who lack capacity to make decisions for themselves and for those who currently have capacity but wish to plan for a time in the future when they may lose capacity.

For the purposes of this article the law includes provisions that will:

-- introduce Lasting Powers of Attorney to enable a person to nominate one or more attorneys to act on his or her behalf in the event that they lose mental and/or physical capacity; and
-- introduce Advance Planning to include Advanced Care Plans and Advanced Decisions to Refuse Treatment.

Lasting Powers of Attorney
Lasting Powers of Attorney (LPA) would allow a capable person aged 16 or over (Donor) to choose an attorney (Attorney) to take control of the Donor’s affairs if he or she loses capacity at some point in the future.
There will be two types of LPA, covering (i) property and financial affairs; and (ii) health and welfare.

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Property and financial affairs LPA
A property and financial affairs LPA would allow the Attorney to make decisions about money and property, such as paying bills, collecting benefits and dealing with the Donor’s assets (including their real estate). The Donor may permit the Attorney to use this type of LPA whilst the Donor retains mental capacity (in a similar way as a regular power of attorney) and its use is not restricted until such time as the Donor loses capacity.

Health and welfare LPA
A health and welfare LPA will allow the Attorney to make decisions about the Donor’s daily routine, such as what to eat and what to wear, medical care, moving into a care home and life-sustaining treatment (but note ADTR below). This type of LPA will only take effect when the Donor has lost capacity to make their own decisions.

Attorneys and procedure
In both cases, the Donor must name either two Attorneys or name at least one substitute Attorney to act in the event that the original Attorney cannot act.

LPA’s must be registered by the Donor in person when it is made and the registration form will require the signature of a counter-signatory to attest that there was no concern over the Donor’s capacity to make the LPA.

If and when the Donor loses capacity, the LPA would be activated by Her Majesty’s Greffier. The activation of the LPA would involve a signature from a medical professional involved in the Donor’s care to state that the Donor no longer had capacity.

Given that the exercise of an LPA could have significant effects, appropriate safeguard measures will be put in place to ensure that any allegations of fraudulent behaviour by the Attorney or that the Attorney is acting otherwise than in the Donor’s best interests will be investigated and addressed.

Advanced Care Plan
An Advanced Care Plan (ACP) would allow a capable person aged 16 or over (Patient) to express his or her future wishes regarding their care, ahead of a time when they might lose mental capacity to make their own decision. The ACP should be considered by those making decisions about the Patient’s care, after the Patient has lost capacity to make that specific decision.

The purpose of an ACP is to provide a record of the Patient’s wishes, which will be considered as part of the decision-making process when family and/or care professionals are making decisions about the Patient’s future care. An ACP can be used to express the Patient’s wishes on their accommodation preferences and can also be used to express other preferences not directly related to care, such as food choices and religious or ethical views. The ACP could state that certain people should be consulted when decisions are being made about the Patient’s care.

Advanced Decision to Refuse Treatment
An Advanced Decision to Refuse Treatment (ADRT) would allow a Patient to refuse any medical treatment of a specified description at a time when the Patient has lost capacity to consent to this.

If a valid ADRT has been made, any medical professional treating the Patient cannot provide any treatment to the Patient which is specified in the ADRT; it should be noted that if the treatment is not sufficiently specified, the ADRT will not be legally binding in respect of that treatment.

An ADRT must be in writing and a copy must be provided to the Patient’s doctor (and to the Patient’s family and other relevant care workers).  If the ADRT would be likely to result in the Patient’s death, the Patient is obliged to consult a doctor at the point of making the ADRT in order to ensure that it is valid.

Conclusion 
The proposed Capacity Law will not only address the lack of any legislative protection for vulnerable people who do not fall within the remit of current mental health legislation but will also ensure that the human rights of all those who lack capacity are also considered and respected, especially since the enactment of the Human Rights (Bailiwick of Guernsey) Law, 2000.

Fundamentally, the proposed Capacity Law will also empower people to make decisions for themselves wherever possible. This should be seen as a positive step that encourages decision-making by the individual concerned, rather than simply allowing the views of others to be imposed on that person when they lack capacity.

About the author

Paula Fry is a senior associate in the private client and trusts department in Guernsey. Fry deals with all aspects of trust and foundation-related matters, including corporate transactions, company and foundation migrations, re-structuring and the provision of advice in relation to trustees, beneficiaries and protectors. She also has experience in trust litigation, trust information and confidentiality, obtaining the blessing of the Royal Court in respect of a “momentous decision”, the removal of a protector and bringing applications to set aside the transfer of assets to trusts on the grounds of mistake.