Analysis
The applicant was the mother and an attorney of LMS, a 21 year old who had been assessed on 11 July 2020 as lacking capacity to make financial decisions. LMS’s grandfather had died, having made a will under which 30% of his residuary estate was held in trust for LMS contingently on attaining the age of 25. LMS was in receipt of a means-tested benefit, Employment and Support Allowance, and her placement in a specialist residential college was funded by the local authority, the residential component of which was also means tested. Her right to receive those means-tested benefits would cease on receipt of the inheritance. The applicant, with the support of family members, the second to fifth respondents, sought to place the money into a disabled person’s trust to be held by the parents for the benefit of LMS. The applicant contended that the proposed deed of variation would allow LMS to continue to receive means-tested benefits. The first respondent (the Official Solicitor to the Senior Courts) disputed this, considering that the placing of the inheritance into a disabled person’s trust would amount to a deprivation of capital such that LMS would no longer be entitled to means-tested benefits.
Held (allowing the application):
LMS lacked the capacity to agree to the deed of variation and the court had the power to settle the property of a person lacking such capacity. The decision had to be in LMS’s best interests and the possibility of retaining eligibility to means-tested benefits and thereby retaining her inheritance was a factor that LMS would consider if she were able to do so. The correct test to be applied in determining whether there had been a deliberate deprivation of capital for the purpose of securing means-tested benefits was whether the securing of such entitlement could be said to have been a ‘significant operative purpose’ of the relevant actions in disposing of the capital.
There was limited evidence in relation to LMS’s grandfather’s intention when executing his will, but it was clear that his intention to benefit LMS would fail unless the proposed deed of variation was authorised. The possible effect of the inheritance on her entitlement to benefits was discussed and the grandfather had attempted to gain information as to what effect the inheritance would have. In the end, he left the will ‘as it was’ because he had not received information to confirm that LMS would lose benefits because of her inheritance. On this basis, LMS’s grandfather intended her to benefit financially from her inheritance and he would have altered his will had he received information confirming an adverse effect on her entitlement to benefits.
It followed that the proposed deed of variation should be authorised on the basis that it would better effect LMS’s grandfather’s intention that his will would financially benefit LMS. The continuing eligibility of LMS to means-tested benefits was not the significant operative purpose of the proposed deed and it was not the court’s motive in authorising the deed on behalf of LMS. Rather, it was intended to better effect the intention of LMS’s grandfather. Re Sarah McCullagh was persuasive authority that it does not offend public policy for the court to authorise a disabled person’s trust that has the effect of maintaining LMS’s entitlement to means-tested benefits.
JUDGMENT DISTRICT JUDGE JOHN BECKLEY: All statutory references are to the Mental Capacity Act 2005, unless otherwise stated. [1] This is an application for an order under the Mental Capacity Act 2005 permitting the settlement of LMS’s property into a trust. [2] LMS is 21-years old. She has Sotos syndrome and associated with this is …Continue reading "Re LMS [2020] WTLR 1345"