Welfare or wealth? ABG v CDG and the fault lines in guardianship appointments

The recent adults with incapacity case ABG v CDG [2025] SC PER 83 raised a number of points about estate planning, writes Alan Eccles.

Among other things, it brings out apparent distinct viewpoints that might be held on the relative ‘value’ to be attached to financial and welfare appointments. The factual background to the case raises estate planning and succession matters – matters which, if navigated, could manage some of the issues that sparked contention in this case.

The background

AAG was the adult at the centre of the case. The case was about the proposed appointment of his wife, ABG, as guardian. She sought appointment as his financial and welfare guardian. The need for a guardianship stemmed from issues with the execution of a power of attorney by AAG that resulted in its invalidity.

ABG was AAG’s third wife. They had been married for 28 years, and AAG’s cognitive abilities had been affected for a number of years. Ultimately, and by the time of the application, he had been diagnosed with Alzheimer’s dementia. It is of note that in the case, AAG’s views ­– to the extent identifiable – were taken into account. That is of course correct. A point to which we will return.

One of AAG’s three sons (all of them being from a previous relationship), CDG, supported the appointment of ABG as welfare guardian but not as financial guardian. This was the nub of matters.

ABG’s application was supported by the usual form of accompanying reports. These reports concluded that ABG would be suitable to be appointed as guardian with welfare and financial powers.

At the heart of CDG’s concerns about ABG having financial powers was a transfer of AAG’s half-share of the matrimonial home to ABG in 2020. The sheriff’s note states an indication that AAG would bequeath the entire matrimonial home to her own children. AAG’s decision to transfer his interest in the house was a development from his will made in 2015. That will left his part of the home to ABG in liferent with his three sons as the fiars. What was not specified in the sheriff’s note was the identity of the testamentary trustees.

The outcome of the application was that the sheriff granted the application for ABG to be financial and welfare guardian; EFG (one of AAG’s sons) was appointed as a substitute guardian.

The point in dispute: the 2020 disposition and financial powers

As CDG supported the appointment of ABG as welfare guardian, the only point in issue was CDG’s opposition to ABG having financial powers. CDG, via minute, sought the financial appointment himself.  

This opposition derived from the 2020 disposition of AAG’s interest in the home. CDG raised the issue of AAG’s capacity at the time of the transfer. The sheriff remarked (at para [5] of the judgment) that it been discussed during the giving of evidence that the guardianship application was not the place to consider and determine whether or not AAG had capacity to grant the disposition.

Reference was made to notes made by AAG’s financial adviser about the extent of AAG’s capacity at the time of the disposition. However, no direct (or it seems medical) evidence was presented during the proof contradicting an affidavit by the solicitor who dealt with the disposition that AAG had capacity at the time of the transfer.

Beyond that, as far as the court was concerned, all that could be confirmed was that in late 2024 AAG’s capacity was formally considered by medical professionals. At that time he “did not have capacity” (para [7]).

With the matter of AAG’s capacity for the 2020 disposition put to one side, the issue in focus – per Section 53 of the Adults with Incapacity (Scotland) Act 2000 – was whether or not ABG was suitable for the appointment. The various accompanying reports from professionals supported ABG’s appointment – an appointment with financial powers.

The sheriff summarised CDG’s concerns as: “The minuter suggested that if she [ABG] could not be trusted in that regard [ie being ‘open’ about the house transfer and her longer-term aims for it], how could she be trusted with the adult’s financial affairs on a day to day basis?” (para [10]). The sheriff understood CDG’s position to be that if the house situation could be unwound to CDG’s satisfaction, he would support AAG’s appointment as financial guardian.

The sheriff considered CDG’s position to be “somewhat contradictory” (paras [3] and [10]): on the one hand, supporting AAG as welfare guardian; on the other, opposing her appointment as financial guardian; and with another hand(!), apparently being supportive of her having financial powers if the house situation was altered.

While recognising the “frustration and annoyance” (para [9]) arising from CDG’s predicament with the house, the sheriff underlined that the house matter was not the issue to be addressed. It was the applicant’s suitability as guardian with financial powers that was under consideration.

The relative importance of financial and welfare appointments

On the apparently contradictory position held by CDG about AAG being suitable to be welfare guardian but not financial guardian, the sheriff made general comments about the relative importance of welfare and financial powers. At para [3] the sheriff said:

“When it comes to caring for an elderly person with Alzheimer’s dementia, most people would agree that the welfare side of things is the most important. That is not to say that financial matters are not important, just perhaps less so in the whole scheme of things. If the applicant was thought to have probity, the ability, the competence and the trust of others to be a suitable welfare guardian, it seems somewhat strange that no longer applies when financial arrangements are considered.”

Those dealing with powers of attorney will have had this discussion with many individuals. It can particularly arise in ‘blended family’ situations and where there is significant wealth or complex assets are involved.

A classic complex asset driving such discussion is a private/family business. Reflecting on the thinking and discussions experienced on this topic, one might have some sympathy for CDG’s views. They are certainly not unique. The matter of making financial decisions is one that is viewed as being of strategic importance. Identifying the ‘right’ decision-makers can be an involved process. A key theme that comes out is to avoid the concentration of power. There will also be a desire to coordinate the appointed incapacity decision-makers with the overall estate planning aims (ie what is going to happen by the time of, on and after death).

That is not to say welfare powers are not important. Absolutely not. However, the consideration of what is appropriate for a welfare and financial appointment involves different factors. It is probably fair to say that the welfare appointment tends to be one on which people are more relaxed and find it easier to afford those powers as they have a more natural feel for the appropriate appointment(s). It is true that issues of concentration of power can also arise with welfare appointments. For the person granting the powers, they might even be content with enabling one ‘right’ person to be appointed and not too concerned that others need always be involved or to act as some form of counterbalance. The issue of counterbalance is one that comes up regularly, where there is greater family or wealth complexity, in financial attorney appointments.

Whatever the factors that apply to a specific individual, it is very possible that they might have different views about what is right for financial as opposed to welfare appointments.

Of course, ABG v CDG involves a guardianship appointment. That is different to a power of attorney. It does not necessarily mean the overall factors that point to suitability will be different to those for financial and welfare powers and whether appointed by the adult (with capacity) or the court (where incapable). It might also lead to the court avoiding a sole guardian appointment to preclude the concentration of power.  

There is one financial topic where there is a significant difference between attorney and guardianship appointments: gifting. An attorney has, subject to drafting and the general principles of the Adults with Incapacity (Scotland) Act 2000, potentially unlimited powers on gifting (see M, Applicant 2007 SLT (Sh Ct) 24 and McDowall’s Executors v IRC [2004] STC (SCD) 22 on the extent of attorney powers). A guardian will need to involve the Public Guardian (Section 66 of the 2000 Act). That is an important bulwark to possible misuse of financial guardianship powers.   

In the context of ABG v CDG, one could therefore understand a party agreeing to someone having welfare but not financial powers. It is perhaps more difficult to reconcile a view that someone is, however, appropriate to be the financial guardian but only if a matter about an inheritance is addressed to a party’s own satisfaction. While financial and welfare appointments can involve different considerations, the sheriff’s views on CDG’s opposition are understandable given the apparent basis to them, as set out in the sheriff’s note of the evidence.   

The adult’s views

By the nature of a guardianship application, the opportunity to obtain the adult’s views might be very limited. While limited, the general principles found in Section 1 of the 2000 Act require these to be taken into account. Those views might be based on past documented information. In this case, it was noted that ABG could offer some thoughts, albeit with limitations, on the appropriateness of AAG as guardian. He was content with her appointment. There was the 2015 power of attorney, albeit it was invalid. This provides an example of where the adult’s wishes are properly regarded.

While not expressly stated as such in the case, the outcome operated as an implementation of the adult’s known and currently stated wishes. This fits with the UN Convention on the Rights of Persons with Disabilities (UNCRPD) and the concept of supported (compared with ‘substituted’) decision-making.      

‘Best interests’? 

In terms of the 2000 Act, the general principles (Section 1(2)) ultimately point towards taking action which will “benefit” the adult. That language is important. That is especially the case with greater focus on the notions contained in the UNCRPD and supported decision-making.

The sheriff’s note refers to “best interests” (para [12]). Some may say that is the seeming infantilisation in the consideration of the arrangements of an (not “the”) adult’s affairs – an adult who has expressed views and wishes and is currently able to do in a limited manner. With that, “best interests” might be viewed as not fitting with the 2000 Act’s section 1 principles nor having regard to the adult’s known wishes and feelings, even if limited.

B, Minuter, 2014 SLT (Sh Ct) 5 provides an example of the court rejecting the use of “best interests”. North Ayrshire Council v JM 2004 SCLR 956 and G v West Lothian Council 2014 (Sh Ct) GWD 40-730 are also instructive of the use of “best interests” and “benefit”.

For a detailed analysis of this issue, see Alex Ruck Keene and Adrian Ward’s article, ‘With and without “best interests”: the Mental Capacity Act 2005, the Adults with Incapacity (Scotland) Act 2000 and constructing decisions’ (2016) in the International Journal of Mental Health and Capacity Law (No 22).

The topic is also discussed by Jill Stavert: ‘Mental capacity regimes approach to values and participation in proceedings involving individuals with impaired decision-making capacity in Scotland’ in Capacity, Participation and Values in Comparative Legal Perspective (2023; edited by Camilla Kong, John Coggan, Penny Cooper, Michael Dunn and Alex Ruck Keene). 

‘Old-fashioned’ liferents: everyone is unhappy     

AAG’s 2015 will provided for a liferent in favour of his wife with the capital to pass to his children. A path well-trodden in wills that seek to balance providing for a spouse while enabling children (of your own but not the spouse) to ultimately inherit. The principle underpinning this approach is understandable. There is, however, a risk that everyone is unhappy and feels insufficiently provided for. The spouse does not have full control over where they live (which was mentioned as a reason for AAG’s 2020 transfer to ABG (para [10])). The children must wait to inherit. They may have to wait for some time.

It raises the issue of what better ways there could be to provide for the whole family. That would also include consideration of any tax matters. The main issues are likely to be: does the spouse have security over where they will live and have sufficient financial resources? On the latter, a liferent might not generate sufficient income for the spouse. It might also leave them feeling beholden to trustees making arrangements to pay out the income. There are costs associated with that too. There is also the issue of the desire or need to access capital. The spouse might feel a deep lack of independence.

It is suggested that a liferent over non-house assets should be considered in a more nuanced way. A structure whereby ‘strategic’ or valuable moveable assets are held in trust but that resources are passed outright to the surviving spouse to give them suitable ongoing independence and control. This would involve a starting point of a discretionary trust. The selection of the trustees is crucial. Indeed, the selection of trustees might be the critical decision to make this work well for everyone.

A house is of course a less flexible asset. Holding it via a liferent might be the only viable option. If we have the appropriate trustees in place (perhaps the surviving spouse and a professional), the spouse can treat the home as if it is their home (eg decide to move) but can be prevented from doing anything that is off-piste.

That should deal with the house for the spouse. The children may be clock-watching though. How other sources of wealth are dealt with might help them feel more comfortable. That includes making suitable provisions about pensions and other death benefits. It should be noted in the ‘blended family’ situation that care needs to be taken with pensions. A nomination of a pension in favour of a spouse will then mean the surviving spouse could be in control of the ultimate destination of the pension fund. There is real scope of accidental disinheritance via pensions that are not considered carefully. Practitioners should warn clients accordingly.

The core of the contentious issues in ABG v CDG emanated from the longer-term estate planning strategy. The 2020 transfer could have a significant effect on the ultimate destination of AAG’s interest in the home. The 2020 disposition was seemingly inspired by some understandable concerns for ABG on the apparent limitations and restrictions of the liferent in AAG’s will. The will sought to achieve a balance. For AAG and ABG, it did not create the right balance. Those concerns have resulted in the scales in the estate planning of AAG being altered significantly. The sheriff’s note shows this was AAG’s wish and was carried out with professional advice.  

The outcome for AAG’s estate here shows the careful balancing exercise that is required – one that seeks to keep everyone as happy and content as possible. An ‘old-fashioned’ liferent in a will might not provide that answer and is unlikely to do so on its own. A global approach to estate planning and will drafting is needed. With that, there is a better chance to avoid the concerns that ABG justifiably had and the frustrations that CDG is now experiencing.