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Mental capacity and finance

If you are working with or caring for someone who is not able to manage finances, you will need to follow the guidance for carers provided by the Mental Capacity Act in dealing with the person’s financial affairs.

In general, decisions can be taken about small transactions using the person’s available cash, as long as you can show that the decision is in the person’s best interests otherwise you will need to have specific authority, such as power of attorney or deputyship, if you wish to make more important decisions or use money in the person’s bank account.

The Mental Capacity Act allows a person to name those they want to make decisions for them in the future when they might lack capacity themselves. A person can set up a lasting power of attorney for property and affairs if they want someone else to look after their finances. This will give their attorney the authority to make financial decisions on their behalf. Lasting powers of attorney can only be set up by people who have the capacity to do so.

If financial decisions need to be made for someone who does not have capacity to make a lasting power of attorney, the Court of Protection can appoint a deputy. The deputy will be the person the Court thinks is most suitable to hold the authority.

If a service user still has mental capacity to manage their own finances but would prefer someone else to deal with them, they can ask the person to act as their agent and inform the local Department for Work and Pensions (DWP) accordingly. The agent could be a relative, friend or care manager and would normally deal with income from benefits such as retirement pension, pension credit or income support. Where a County Council employee acts as an Agent this must be clearly set out in the service user’s care plan and they must work within the arrangements set out in the handling client finances operational instructions.

The DWP can authorise someone else to become an appointee. This is a lot like having an agent, but operates once the service user no longer has mental capacity.

As a last resort when there is no other arrangement in place, the Council may apply to the Court of Protection for a deputyship order to manage the finances of people who lack the capacity to do so themselves. However, for some people who do not have any financial assets other than their benefits, application to become an appointee may be more appropriate. For further enquiries for either Deputyship or Appointeeship, please contact the Council's Deputyship Officers on 01223 715 571 or 01223 715 570.

Contact us

Email [email protected]
Telephone: 01223 715 581
Fax: 01223 475 950


Deprivation of Liberty Safeguards Team
Box No: SH1211
Shire Hall
CB3 0AP 

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