Deputies and Guardians: Support for you and your clients with life changing injuries

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Gordon Andrews

June 20, 2024

5 mins read

The long-term impact of someone suffering an injury, as a result of an accident or negligence can be life changing. Compensation can often be awarded to the injured individual. To give an idea of the sums involved, motor insurers paid out £2.4 billion in personal injury claims in 2023 and the NHS paid a total of £1.992 billion in damages in 2022/23.

It may not be possible or appropriate for the injured individual to to hold these awards directly. The appointment of a Deputy or Guardian; or the creation of a suitable trust, such as a personal injury trust, may be required to hold and manage these funds.

This means that Deputies, Guardians and Trustees may approach you to guide them through the complexities when making financial decisions on behalf of the injured individual. As an adviser, you can help them understand the financial planning options available to them, keeping the injured individual at the heart of your advice.

This is the first of a two-part series, which will give guidance on deputyship and dispel some of the myths. Next month we’ll cover personal injury trusts.

Key points

Deputies and Guardians: 

  • are expected to obtain financial advice to help them understand what financial planning and investment options are available to them. 
  • are given authority in the Deputy/Guardianship Order. Seeing this early can help you, as an adviser, to understand what authority they have and if there are any limitations to their authority and help speed up the advice process. 
  • who want estate and inheritance tax planning advice, may require approval from the Court before your recommendations can proceed – the earlier this is identified the earlier the request can be made. 


Court appointments of Deputies or Guardians

In cases where compensation is paid to someone who lacks capacity to make decisions for themselves, and where there isn’t an appropriate Power of Attorney in place, the Court will appoint someone to manage the compensation as well as the property and financial affairs of the individual and in some cases to make decisions regarding health and welfare.

In England and Wales, the Court of Protection will appoint a Deputy to act for the individual. In Scotland, the Sheriff will appoint a Guardian. 

Planning tip

A lasting Power of Attorney, in England and Wales, or a Continuing Power of Attorney, in Scotland, created while your client has capacity allows them to choose who can act if they lose their capacity. And they can discuss their wishes and needs with the appointed person.

If there is no Lasting or Continuing Power of Attorney in place, the Court could appoint someone they don’t know or have no connection with. They may not know their wishes either.

Depending on the individual’s level of incapacity, the Deputy or Guardian will 

  • help an individual to make decisions or  
  • make decisions on their behalf. 

The presumption is that the individual has capacity to make a decision. This should be assessed every time a decision is made. Because an individual lacks capacity to understand one decision, it doesn’t mean that they lack the capacity to understand another. So, they may be able to make that decision for themselves. 

Their role can be quite complex and may require ongoing legal support. Family members and friends may be daunted by the prospect of having to take on this responsibility. Instead, someone in a professional capacity, such as a solicitor, could be appointed. Professional Deputies and Guardians will charge for this service. 


Myth 1

Compensation is ring-fenced so Deputies and Guardians can't obtain financial advice for an incapacitated individual.

Deputies and Guardians are expected to obtain advice to understand the financial planning and investment options available. The advice is for the individual they are acting for, similar to the process to providing advice to an Attorney. 

Any fact find should draw out the needs and goals of that individual. This will draw out their long and short term needs for capital and income requirements, suitable investment opportunities and tax and estate planning.


Myth 2

An incapacitated individual cannot own investments.

It may be the case that the individual cannot own them directly but this is where the role of the Deputy or Guardian comes in. They can apply for investments on behalf of the person they are acting for. These investments include but are not limited to Individual Savings Accounts, mutual funds, National Savings products and offshore and onshore investment Bonds.


Myth 3

Investments managed by a Deputy or Guardian will be taxed as a trust.

They are both acting on someone’s behalf. It is the individual’s tax position that should be considered and not the tax position of the Deputy or Guardian. 


Myth 4

Deputies and Guardians have authority to do anything they feel appropriate.

Their authority is limited to what is included in the Deputy or Guardianship Order (‘the Order’). This will set out their specific powers, which can vary from one case to another.

Reviewing the Order early in the advice process will help you understand what authority they have and what decisions they can make. 


Myth 5

Deputies and Guardians can't carry out estate and inheritance tax planning or make gifts (which includes the creation of a trust).

It is not uncommon for the Order to include the right to make gifts, however this authority is generally limited to the same rights as an Attorney acting under a Lasting or Continuing Power of Attorney. 

Any gifts made must be: 

  • reasonable considering the size of the individual’s estate,  
  • made to a charity the individual has previously gifted to or may be expected to gift to; or  
  • customary (such as Christmas and birthdays) and the gift must be related or connected to the individual. 

This may seem restrictive, but this is to ensure that they don’t use or give away the compensation which should ordinarily be used to support the needs of the individual it was awarded to.  

If they want to undertake tax and estate planning which are outside of their standard authority and based on your advice, they can ask the Court to authorise this. It is important to obtain this approval before proceeding with your recommendations because the approval process can take some time.  

If you can identify the need for estate and inheritance tax planning early in your discussions with the Deputy or Guardian, this can reduce the amount of time it may take to for them to proceed with your recommendations.  

However, it should be noted that usually the Court will consider any estate planning to be secondary to ensuring that the individual is provided for during their lifetime. 


The role of a Deputy and Guardian can be time consuming and complicated. They must ensure that the compensation payment meets the needs of the individual for their lifetime and that every decision they make is in the best interest of that individual. 

Good tax planning and investment options can ensure that compensation does its job. The value of independent financial advice should not be underestimated.

Contact our Distribution team

For further information and queries, please call one of our Distribution team today. 



The information on this site is for qualified financial advisers and must not be relied on by anyone else. If you are not an adviser please go to our customer website for more information about our products and services.

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