Decision making in respect of property and affairs

The Court of Protection (the court) is permitted to make decisions in respect of the property and affairs of a protected person (P) by section 16 of the Mental Capacity Act 2005 (MCA 2005). Common applications include applications to buy, sell and lease property, applications to make gifts and settle property and applications authorising the deputy to sign a statutory Will on behalf of P.

When making decisions in respect of P’s property and affairs, the decision maker must first consider the principles set out in MCA 2005, s 1, namely:

  1. P must be assumed to have capacity unless it is established that P lacks capacity

  2. P is not to be treated as unable to make a decision unless all practicable steps to help P to do so have been taken without success

  3. P is not to be treated as unable to make a decision merely because P makes an unwise decision

  4. an act done, or decision made, under MCA 2005 for or on behalf of P must be done, or made, in P’s best interests

  5. before

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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