In the matter of Joan Treadwell deceased

Senior Judge Lush has made another significant decision about gifting by a deputy following on from the case of Re GM in April. This case looks again at what forms a reasonable level of gifting and the importance of a previous will as evidence of a person’s wishes.

Lush SJ also considered the Court of Protection’s jurisdiction once the person that lacks capacity dies.

Joan Treadwell was born in 1926. She had five children, including Colin Lutz, from her first marriage; four grandchildren; and two great-grandchildren. Her third marriage, in 1984, was to William Treadwell, who died in 2007. William had two daughters.

Joan was diagnosed with Alzheimer’s in 2005 and lived in a care home until her death in 2012. Initially, she was self-funding, but in 2009 she became eligible for NHS Continuing Care.

In April 2007, son Colin applied to become Joan’s receiver and the following January was appointed deputy for property and affairs. In June 2007, Colin had applied for a statutory will on his mother’s behalf.

Joan made a will in 1990 leaving £1,000 to each of her five children and the residuary estate to her two stepdaughters in equal shares if husband William died before she did. The majority of her wealth came from the family home, which had originally been bought by William. The property was sold in 2007 giving Joan an income of £10,000 per annum and capital of about £150,000.

?Ousting stepsisters

The statutory will application Colin made intended to disinherit the stepdaughters and leave the estate to him and his siblings, but the parties reached a compromise. So the will left £5,000 to each of Joan’s five children and two stepdaughters with the remainder being shared between the two stepdaughters.

The public guardian urged Colin to make an application for retrospective consent for gifts he had made as deputy. In three accounting years, he made gifts totalling £59,375. This included some substantial gifts for occasions like housewarmings, graduation and trust funds for great-grandchildren.

Lush SJ said Joan’s will was the factor of magnetic importance. “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…” he said. “Mr Lutz was interfering with the succession rights under her will by redirecting his stepsisters’ inheritance in favour of his own family by making excessive gifts to them.”

The senior judge added that it was not possible to lay down any general rules about the level of gifting. In the circumstances, however, the gifts were excessive. Considering Joan’s income was £10,000 per annum, he found that a total of £5,000 per annum in gifts would be reasonable. He calculated a loss of £44,375 to the estate and approved the application for an order to enforce the security bond for this amount.

He also said that the court did not have jurisdiction to ratify the gifts made by the deputy after Joan’s death, but it did have regarding the discharge of security. After 1 May 2010, a security bond remains in force for two years after the date of death or earlier if discharged by the court. However, he did not include as a loss to the estate the gifts that the court would have ratified had Joan been alive.

Lush SJ said that unless there were compelling reasons not to, identities of parties should be published particularly where someone has acted beyond their authority. Cases must be reported so that deputies and attorneys learn what they can and cannot do along with the consequences if they act inappropriately.

He also said that “decisions of the Court of Protection should be open to scrutiny in order to enhance accountability, consistency and predictability”, which may have partly been a response to the widely reported criticisms of the ‘secret court’.

This case reinforces the point that gifts made without permission of the court are de minimis and those ratified by the court will need to be reasonable compared to the size of the estate. It also shows the important role wills play as evidence of intent and that lifetime gifts by deputies should not frustrate those intentions.

See Re Joan Treadwell (Deceased) [2013] EWHC 2409

Lynsey Colman is an associate at Barlow Robbins

She writes regular Court of Protection case updates for Private Client Adviser