UK Law and Practice Contributed by: Roger Gherson, Alfred Gherson, Lisa Uttley and David Tipping, Gherson Solicitors
rates rather than the higher trust rates, with the full individual CGT annual exempt amount available. Discretionary trusts protect means-tested benefits as the beneficiary has no vested right to the trust fund. Personal injury trusts are specifically exempt from benefits means-testing. The Mental Capacity Act 2005 provides for lasting powers of attorney, Court of Protection supervision, deputyship and statutory wills for adults lacking capacity. For minors, bereaved minor trusts and age 18-to-25 trusts are excluded from the relevant property regime and are eligible for the vulnerable beneficiary election. Bare trusts, discretionary trusts, Junior ISAs and child pensions provide additional planning tools, though bare trusts are unsuitable where benefits protection is needed. 8.2 Appointment of a Guardian England and Wales use different mechanisms depend - ing on whether the subject is a child or an adult lack - ing capacity. For children, a parent may appoint a testamentary guardian by will without any court proceeding. There is no ongoing court supervision of the guardian. The court may also appoint a guardian on applica - tion. For adults, a Lasting Power of Attorney (“LPA”) is created privately by the donor. At the same time, they have capacity and are registered with the Office of the Public Guardian (“OPG”); no court proceeding is required and there is no routine ongoing supervision. By contrast, deputyship under the Mental Capacity Act 2005 requires a Court of Protection application. It is subject to ongoing OPG supervision, including annual reporting, security bonds and the power to direct Court of Protection Visitors. Deputies cannot settle property or execute wills – these require separate court orders.
Mental Health Act 1983 guardianship is an administra - tive (not court) process under local authority supervi - sion, conferring only limited welfare powers. For HNW families, the LPA is the preferred tool because it avoids court proceedings entirely. 8.3 Planning for Incapacity England and Wales provide three principal mecha - nisms for planning for mental incapacity under the Mental Capacity Act 2005: • lasting powers of attorney (“LPAs”) are the primary planning tool (a property and affairs LPA author - ises an attorney to manage finances, investments, property and business interests, usable immediate - ly upon registration, even before capacity is lost); • a health and welfare LPA authorises decisions about medical treatment and care, exercisable only once capacity is lost; • advance decisions to refuse treatment allow a person to specify medical treatments they wish to refuse if they later lack capacity; decisions con - cerning life-sustaining treatment must be in writing, signed and witnessed. Where no LPA exists, the Court of Protection may appoint a deputy, requiring a formal court application and ongoing OPG supervision including annual report - ing and a security bond. Deputies cannot execute wills or settle property: these require separate court orders. Deputyship is significantly more expensive and restrictive than an LPA, making advance LPA plan - ning essential for HNW individuals. 8.4 Elder Law The UK’s framework for planning for longer lives encompasses pension flexibility, tax reform, care funding, incapacity planning and intergenerational coordination. Pension freedoms (from 2015) allow flexible draw - down. However,, once again, the policymakers have back - tracked and from April 2027, most unused pension funds will be brought within IHT, potentially facing
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