Court of Protection : Guarantee Bond

[Kleg]

I have almost been appointed as a Deputy for my Mother.
Before the appointment is final, I am told by the Court of Protection that I must buy a "Guarantee Bond" with AVIVA Insurance.

This, I think, protects my Mother against any financial loss, if I fail to carry out my Deputyship duties. But I am then held personally liable to AVIVA so that they can recover their money - some insurance!

It sounds ilke I am obliged to use my house/assets as a security to protect my Mother's assets.

Whilst I want to do my best for her, does anyone know how 'extreme' my mis-management needs to be in order that the Guarantee Bond is invoked?
What if I just make an honest judgement that turns out to be a costly investment?

HELP - I cannot affotrd to lose my house in order to keep my mother in hers - THANKS

 

[Saffie]

I too have recently become a deputy for my husband and have had to purchase a bond via Aviva. I understood it was simply to protect the estate of the vulnerable party, that is so that I don't squander away all my husband's money. I have to pay an annual premium to cover a set amount of insurance. Surely, the purpose of the insurance bond, like any other insurance policy, is as protection - so that you don't have to worry about having to use your own capital against any possible shortfall. Otherwise, what is the point of it.

 

[jenniferpa]

I think it's a general principle of any insurance policy that it protects you against something that you couldn't control or hadn't forseen. However, I'm not sure any insurance policy would protect you against your own malfeasance. That is, I can insure my house against fire, and the insurance will pay out if I accidentally leave a candle burning and burn the house down. If, however, I pour petrol all over the place and then set light to it, then obviously, the insurance policy won't cover me. I think this is what the bond wording refers to - it gives the insurance company the right to come after your assets should you fail to live up to the standards you agree to.

At least, that's my opinion.

 

[Saffie]

Yes, sorry Jennifer, I meant that we are assuming that we are speaking as honest people and that no mishandling would be deliberate - as with any insurance policy!

 

[jenniferpa]

P.S. From "A guide for Deputies appointed by the Court of Protection"

Am I protected from liability as a Deputy?
If you act within the terms of the order that appointed you as a Deputy, and comply with the Act and the Code, it is unlikely that you would incur legal liability.
If you act outside the terms of your authority or do not carry out your responsibilities properly you will be held accountable for your actions. For example if you fail to claim benefits to which the person is entitled, or spend their money other than for their benefit, the Court will consider that you have caused the person financial loss. Under these circumstances the Court may decide to enforce the security bond or authorise someone to bring an action against you.
If you enter into a transaction with a third party on behalf of the person who lacks capacity, for example you hire a workman to repair their house, you are not personally liable for payment. You are considered the agent and the person is the principal who is liable for payment.

 

[Kleg]

Thank you ....but

Thank you to those who have responded....what I still cannot undeerstand is...

You all point out that I am only liable (as is reasonable) if I abuse or fail to carry out my duties as a Deputy...in this circumstance my assets may be taken as compensation...that's OK.

But if miscreants are personally liable - why are the premiums necessary to be charged to the rest of us?

Because I can see no conditions under which their is any compensation for the Deputy's equivalent of Jenefererpa's "burning candle".

So the bondsman gets their money back from the miscreant and probably millions of £££'s of unecessary premiums from the rest of us...how's that reasonable?

 

[nitram]

I think it's a case of the COP protecting itself.

If an attorney mishandles a donor's finances they become liable to restitute matters, if they can't pay they can be taken to court and punished by imprisonment. The donor does not recover the loss.

A deputy on the other hand is acting on behalf of the COP making the COP liable if the deputy cannot restitute matters. The COP therefore insists on some form of insurance against a deputy defaulting.

 

[jenniferpa]

I think nitram's correct: if you as an attorney have assets then the insurance company will pay up and then try to recoup from you, but if you had no assets then the insurance would still pay up, but there may be no way for them recoup that expenditure. That's where the insurance aspect comes in.