Analysis
The public guardian made an application to enforce a security bond of £44,300 in respect of unauthorised gifts made by the late Mrs Joan Treadwell’s deputy for property and financial affairs, Colin Lutz, who was her son from her first marriage. She had five children in total all from her first marriage.
At the age of 58 in 1984 Mrs Treadwell married her third husband William Treadwell, who had two daughters of his own: Joanna Wildgoose and Emma Treadwell.
In 2005 Mrs Treadwell was diagnosed as having Alzheimer’s disease and entered a nursing home. Mr Lutz was appointed as his mother’s receiver in 2007 and as her deputy in 2008.
In 1990 Mrs Treadwell made a will leaving her entire estate to her husband and if he had predeceased then £1000 to each of her five children and her residuary estate to her two step-daughters. Her main asset was a half-share in the matrimonial home that had been gifted to her by Mr Treadwell four years after their marriage. The house was sold in January 2008 for £305,000 and the net proceeds of sale came to £276,000.
On 28 June 2007 Colin Lutz applied to the court for an order authorising him to execute a statutory will on his mother’s behalf which would disinherit the step-daughters. A compromise was reached among the parties and a statutory will was signed giving pecuniary legacies of £5,000 to each of her five children and her two stepdaughters; and her residuary estate to her stepdaughters in equal shares. The statutory will was executed on 21 June 2008.
During her time in the nursing home Mrs Treadwell became eligible for NHS Continuing Health Care. Her income was £10,000 per year and her outgoings extremely low.
During the accounting year from April 2009 to April 2010 Mr Lutz gifted £34,800 of her money to her children and grandchildren on his mother’s behalf (including £9000 to each of his own two children). From April 2010 to April 2011 he gifted £9,450 to her grandchildren. From April 2011 to April 2012 he gifted £15,125 (including £6,000 to Harry, her great grandson).
The Office of the Public Guardian was concerned about the level of gifting and advised Mr Lutz to apply to the Court of Protection for retrospective approval of the gifts. He did so but his mother died before the hearing could take place.
Mr Lutz argued that the diversion of his mother’s money to her step-daughters if repayment was ordered would be so offensive to her memory that a more grievous insult could hardly be imagined, and directly contrary to her best interests.
Held (allow the Public Guardian’s application and ordering enforcement of the security in the sum of £44,375):
- (1) It is not possible to lay down any general rule as to the amounts a deputy may give away, as each case will turn on its own facts.
- (2) Colin Lutz resented the compromise reached over the statutory will and subsequently sought to undermine it by dissipating any residuary estate his mother might leave on her death by making excessive gifts to family members.
- (3) Quantifying loss to the estate is done by identifying the gifts that the deputy was authorised to make and, secondly, any additional gifts that, having regard to all the circumstances, might reasonably have been ratified by the court. Any other gifts made on customary occasions, christening, housewarming and graduation gifts made on Mrs Treadwell’s behalf are subject to the proviso that they are ‘not unreasonable having regard to all the circumstances and, in particular, the size of her estate’.
- (4) The deputy could have made gifts to close family members each year in the total sum of £1,000 within the terms of the deputy order. If the deputy had applied in each of the three years for authority to make additional gifts to family members of £4,000 this would have been allowed by the court. Therefore the court should only call in the bond in respect of unauthorised gifts which the court would not have ratified had the earlier proceedings not been discontinued.
- (5) For someone in Mrs Treadwell’s financial position, anything over £100 for a christening or graduation gift and £50 for a housewarming gift was unreasonable having regard to all the circumstances, and in particular the size of her estate.
- (6) This judgment can be reported because decisions of the Court of Protection should be open to scrutiny and reporting plays an educative role in informing the public about what deputies and attorneys can and cannot do and what happens when they misbehave. When a deputy exceeds their authority, or behaves in a way that is not in the best interests of a person who lacks capacity, they forfeit any right to confidentiality.