Healthcare student reviewing a Scottish financial guardianship document

Financial Guardianship in Scotland: What Healthcare Students Need to Know

Who Manages Money When Someone Can’t?

Managing money is something many people do routinely: paying bills, using a bank account, receiving benefits or dealing with housing costs.

But what happens when an adult becomes incapable of managing some or all of their financial affairs?

Those responsibilities do not simply disappear, but neither can a relative automatically step in and take control.

In Scotland, the Adults with Incapacity (Scotland) Act 2000 provides legal mechanisms for managing the property and financial affairs of an adult who is incapable of doing so themselves.

One of these mechanisms is financial guardianship.

Financial guardianship allows a sheriff to appoint a person or organisation and grant specific, ongoing powers over the adult’s property or financial affairs.

What does financial guardianship mean?

A financial guardian may be authorised to manage matters such as:

  • bank or building society accounts;
  • household bills;
  • benefits and pensions;
  • savings and investments;
  • debts and financial commitments;
  • property;
  • insurance;
  • tax matters;
  • care-related payments; or
  • other assets belonging to the adult.

The powers depend entirely on the wording of the guardianship order.

A financial guardian does not receive automatic authority over every account, asset or transaction. They may exercise only the powers expressly granted by the sheriff.

The purpose of the appointment is to benefit the adult; not to preserve an inheritance, make life easier for relatives or transfer control of the adult’s money unnecessarily.

Family members cannot automatically take over

Without appropriate legal authority, even a close relative cannot automatically:

  • access the adult’s bank account;
  • sign financial documents;
  • sell the adult’s property;
  • manage their savings;
  • redirect pensions; or
  • make financial decisions on their behalf.

Being someone’s spouse, child, carer or “next of kin” does not provide legal authority over their money.

Banks, pension providers and other organisations will normally require evidence of the person’s legal authority before allowing access to the adult’s funds.

A diagnosis does not automatically establish incapacity

Conditions such as dementia, acquired brain injury, learning disability or neurological illness may affect someone’s ability to manage financial affairs.

However, a diagnosis alone does not establish incapacity.

The question is whether the adult is incapable of acting, making decisions, communicating decisions, understanding decisions or retaining the memory of decisions concerning the particular financial matters involved.

Someone may be able to manage everyday spending but be unable to understand a complex property transaction. Another person may need help organising bills but remain capable of deciding how their money should be used.

Capacity should therefore be considered in relation to the particular financial decision or area of financial management; not treated as an all-or-nothing label.

When might financial guardianship be needed?

Financial guardianship is generally considered when:

  • the adult is incapable of managing relevant financial or property matters;
  • financial decisions or actions will be required on an ongoing basis;
  • no suitable and valid continuing power of attorney covers the necessary decisions;
  • the proposed powers will benefit the adult;
  • the benefit cannot reasonably be achieved without legal intervention; and
  • a less restrictive option would not be sufficient.

Guardianship is normally intended for continuing financial management. If only one action is required, or the adult’s finances are straightforward, another legal mechanism may be more appropriate.

Less restrictive alternatives

The Adults with Incapacity (Scotland) Act requires consideration of whether the intended benefit could reasonably be achieved without the proposed intervention and whether a less restrictive option is available.

Before pursuing financial guardianship, it is important to consider alternatives.

Continuing power of attorney

A person with capacity can grant continuing powers of attorney authorising someone they choose to manage specified property or financial matters.

Depending on the wording of the document, continuing powers may begin immediately or come into operation in specified circumstances. The power of attorney must be registered with the Office of the Public Guardian in Scotland before it can be used.

A power of attorney cannot ordinarily be created for the person after they have lost the capacity required to grant it.

Department for Work and Pensions appointeeship

If the adult’s income consists only of benefits administered by the Department for Work and Pensions, a Department for Work and Pensions appointee may be able to manage those payments.

A similar appointee arrangement may apply to benefits administered by Social Security Scotland.

Appointeeship does not provide general authority over savings, property, private pensions or other financial affairs.

Access to Funds Scheme

The Access to Funds Scheme allows an individual, local authority or other authorised organisation to apply to the Office of the Public Guardian for access to specified funds belonging to an adult with incapacity.

It may be suitable where the adult’s finances are relatively straightforward, such as:

  • paying household bills;
  • buying food and clothing;
  • meeting ordinary living expenses;
  • accessing a private or occupational pension;
  • paying a particular debt; or
  • purchasing an item the adult needs.

The scheme provides limited authority and is not a substitute for guardianship where broader or more complex powers are required.

Intervention order

An intervention order may be appropriate when one specific financial action or decision is required.

For example, it might authorise someone to:

  • sell a particular property;
  • sign a specific legal document;
  • access an identified account;
  • deal with a particular debt; or
  • complete one defined financial transaction.

An intervention order normally ends once the authorised action has been completed.

However, selling a property may create money that must then be managed on an ongoing basis. If continuing management of the proceeds is required, financial guardianship or another form of authority may still be necessary.

How is a financial guardian appointed?

An application is normally made to the sheriff court for the area in which the adult lives or owns property.

Anyone claiming an interest in the adult’s property or financial affairs may apply. This could include:

  • a relative;
  • friend;
  • carer;
  • solicitor;
  • professional guardian;
  • local authority; or
  • another suitable person or organisation.

The application must explain:

  • why the order is necessary;
  • what financial powers are being requested;
  • why each power will benefit the adult;
  • why the benefit cannot reasonably be achieved without the order;
  • why a less restrictive alternative is insufficient; and
  • why the proposed guardian is suitable.

What reports are required?

An application for financial guardianship will generally require two medical reports and a separate suitability report.

Two medical reports

The two medical reports assess the adult’s incapacity in relation to the powers being requested.

The doctors examine the adult separately and complete their reports independently.

Where incapacity arises because of mental disorder, one report must normally be completed by a medical practitioner with the required approval under Scottish mental health legislation. The other may commonly be completed by the adult’s general practitioner or another doctor with relevant knowledge.

The medical examinations will generally need to have taken place no more than 30 days before the application is lodged. A sheriff has limited discretion to accept an older medical report where satisfied that relevant circumstances have not changed.

Financial suitability report

For an application relating to property or financial affairs, a report must also be provided by someone with sufficient knowledge to comment on:

  • whether the proposed order is appropriate;
  • the adult’s financial circumstances;
  • their ability to manage the relevant affairs; and
  • the suitability of the proposed guardian.

Depending on the circumstances, this report might be completed by a suitably informed professional or another person with sufficient knowledge. It is not automatically a social-work report.

If the application also seeks welfare powers, additional reporting requirements apply. A local authority suitability report will normally be required for the welfare part of the application.

What does the sheriff decide?

The sheriff considers whether:

  • the adult is incapable in relation to the relevant financial matters;
  • a guardianship order is necessary;
  • the requested powers comply with the principles of the Act;
  • the powers are appropriately limited;
  • the proposed guardian is suitable; and
  • the appointment will benefit the adult.

The sheriff may:

  • grant the requested powers;
  • grant only some of them;
  • change or restrict their wording;
  • impose conditions;
  • ask for further evidence; or
  • refuse the application.

If the application is approved, the guardianship order will identify the exact powers the guardian may exercise.

How long does financial guardianship last?

A guardianship order will normally be granted for three years, but this is not a fixed rule.

The sheriff may grant the order for:

  • a shorter period;
  • a longer fixed period; or
  • an indefinite period.

The appropriate duration depends on the adult’s circumstances.

If the order has a fixed end date and the powers are still required, an application for renewal must be made before the appointment expires.

What happens after appointment?

The financial guardian cannot simply begin moving money as they choose.

The Office of the Public Guardian registers the appointment, issues the guardian’s certificate and supervises the guardian’s management of the adult’s finances.

Depending on the order and directions given, the guardian may need to:

  • obtain caution or another form of security;
  • prepare an inventory of the adult’s estate;
  • submit a management plan;
  • maintain detailed financial records;
  • retain invoices, receipts and bank statements;
  • keep the adult’s money separate from their own;
  • submit accounts to the Public Guardian;
  • seek consent before particular transactions;
  • report changes in the adult’s circumstances; and
  • provide a final account when the appointment ends.

The inventory and draft management plan are normally submitted within three months of the guardian’s certificate being issued, unless the sheriff or Public Guardian directs otherwise.

The guardian must follow the statutory principles

A financial guardian must follow the principles of the Adults with Incapacity (Scotland) Act 2000 whenever exercising their powers.

Benefit

Any action taken must benefit the adult.

Managing the adult’s estate is not about protecting what other people may eventually inherit. The money should be managed for the adult’s benefit.

Necessity

The guardian must consider whether the intended benefit could reasonably be achieved without using the guardianship power.

Least restrictive option

The adult should retain as much control as possible.

If the adult can manage a small amount of spending money or make particular financial choices, the guardian should not automatically remove that independence.

Past and present wishes

The guardian must consider the adult’s past and present wishes and feelings, as far as these can be established.

This may include the person’s established:

  • spending habits;
  • charitable giving;
  • cultural or religious practices;
  • preferences about property;
  • lifestyle choices; or
  • priorities for their care and comfort.

Consultation

Where reasonable and practical, the guardian should consider the views of relevant people, such as the adult’s nearest relative, primary carer, attorney or another person with an interest in their welfare or financial affairs.

Encouraging skills

The adult should be encouraged to use existing financial skills and develop new ones wherever possible.

Guardianship should support the person; not automatically take over every part of their financial life.

Limits on the guardian’s authority

A financial guardian must not:

  • exercise powers that are not contained in the order;
  • use the adult’s money for their own benefit;
  • mix the adult’s money with their personal funds;
  • make unauthorised gifts;
  • ignore requirements imposed by the sheriff or Public Guardian;
  • treat the adult’s estate as a future inheritance; or
  • make personal-welfare decisions without separate authority.

Some transactions, including gifts or the purchase or sale of accommodation, may require specific authority or the Public Guardian’s consent.

Financial abuse or misuse of guardianship powers should be reported and investigated through the appropriate legal and safeguarding processes.

Financial guardianship in healthcare

Financial guardianship can become relevant during:

  • complex discharge planning;
  • arranging care-home fees;
  • managing charges for care or support;
  • organising adaptations or equipment;
  • paying household costs while someone is in hospital;
  • dealing with an empty property; or
  • funding services for the adult.

However, financial authority and welfare authority must not be confused.

A financial guardian may have authority to pay care-home fees, but that does not necessarily mean they can decide which care home the adult will move to.

They may be able to pay for treatment or equipment, but that does not automatically give them authority to consent to the treatment.

Decisions about healthcare, accommodation and personal welfare require the appropriate welfare authority and must follow the relevant legal framework.

Verifying a financial guardian

When someone says they are the adult’s financial guardian, healthcare or social-care staff should not rely on the title alone.

The appropriate team should check:

  • the guardian’s certificate of appointment;
  • the current guardianship order;
  • the exact financial powers granted;
  • the date the order began;
  • its duration and expiry date;
  • any conditions or restrictions; and
  • whether more than one guardian has been appointed.

The appointment should be registered with the Office of the Public Guardian in Scotland.

Student nurses are not expected to interpret complicated financial powers themselves. If authority is unclear, raise it with the registered nurse or professional coordinating the person’s discharge or care.

Financial guardianship versus power of attorney

A continuing power of attorney is granted by the adult while they have the capacity to make that arrangement. It allows the adult to choose who should exercise the specified financial powers.

A financial guardian is appointed by a sheriff after a formal application because the adult is incapable in relation to the relevant matters and continuing legal authority is required.

A continuing attorney is therefore chosen by the adult. A guardian is appointed through the court process.

Both can exercise only the powers legally granted to them.

Why financial guardianship matters

Financial guardianship provides lawful authority for ongoing financial management when an adult cannot manage the relevant affairs and less restrictive arrangements are insufficient.

But guardianship is not simply about taking control of someone’s bank account.

It comes with:

  • defined legal powers;
  • statutory duties;
  • financial-recording requirements;
  • supervision by the Public Guardian;
  • limits on the guardian’s authority; and
  • an obligation to keep the adult’s benefit, wishes and remaining abilities at the centre of every decision.

A useful rule for healthcare students is:

Financial authority is not welfare authority and being family is not legal authority.

References

Back to blog

Leave a comment

Please note, comments need to be approved before they are published.