Where to turn
For families dealing with an imminent exit from the wardship system, there are many issues to consider. A robust plan to manage their loved one’s assets is critical. Barry Kennelly, Cedric Heather, and Louise O’Connor weigh up the options
A serious injury or illness is traumatic for the person who suffers the injury or illness as well as their family. It can be devastating emotionally, physically, and financially.
This is now particularly relevant for families where a loved one is exiting wardship, as the burden of managing funds that were formerly managed through the Office of Wards of Court will now typically be on the family.
Many families who find themselves in this position have no experience of financial markets, so the challenge is even greater for them. They have been hit by a catastrophic event and now have significant wealth to manage.
They need a distinct approach from an investment manager to take these challenges into account.
Legislative changes
The (as amended), which was commenced on 26 April 2023, establishes a new legal framework for supported decision-making in Ireland.
The act introduces a number of new arrangements in a graduated three-tier system that will be supervised by the Office of Decision Support Services.
The arrangements can be utilised by people who need support to make personal welfare and property related decisions:
- People who require limited support can appoint a ‘decision-making assistant’ (DMA) to help explain complicated issues (this is the first tier of support within the framework of the act),
- People who need more support than a DMA can appoint a ‘co-decision maker’ (CDM) who has the legal authority to make joint decisions with them (this is the second tier of support),
- Finally, the third tier of support involves a court appointed ‘decision-making representative’ (DMR) who will make certain decisions on behalf of the person who needs support.
Wards of court
Where someone was previously made a ward of court, if applicable, the decision about how to invest a compensation award was made by the High Court through the Office of Wards of Court on their behalf. The 2015 act has fundamentally changed this arrangement by ending the wardship system for adults.
No new wards of court will be made in respect of adults, and adult wards of court will exit wardship on a phased basis over the coming 12 months. The current rules provide that all adults who are currently wards of court must exit wardship by 26 April 2026.
The appointment of a DMR is likely to be of relevance to a lot of families whose loved ones are exiting from the wardship system.
Overall, the effect of the 2015 act and the abolition of the wardship system may mean that the responsibility for assisting with and/or making investment decisions on behalf of someone who requires assistance in making decisions, or does not have capacity to make decisions, may now be with family members.
Allowing individuals and their families to have more input in making these decisions is to be commended; however, in some cases, it could potentially create a further burden by placing greater responsibility on family members who are already dealing with the impact of the injury or illness of the person directly affected.
Where the court appoints a DMR, section 38(6) of the 2015 act states that the court is obliged to regard the following:
- The size, nature, and complexity of the relevant person’s financial affairs, • Any professional expertise, qualification, or experience required to manage the relevant person’s financial affairs,
- The capability of the proposed representative to manage the relevant person’s property and affairs, and
- The financial expertise and support available to the proposed representative.
In the context of a discharge application from wardship, where a DMR has been appointed, the Circuit Court Rules (Assisted Decision-Making (Capacity) Act 2015) 2023 () provides that these matters must be included in the application.
These legislative provisions underline that the DMR needs to have the financial expertise to manage the former ward’s estate. In practical terms, for the majority of cases, this means there is a need for appropriate external financial advice.
At the commencement of the 2015 act, there were around 2,300 adult wards in the system. As of the end of June 2025, it is understood that only around 139 adults had been discharged from wardship under the act.
This figure is only around 6% of the adults who will need to leave wardship by the 26 April 2026 deadline, yet there is currently no ability under the 2015 act to extend the date.
For many families, they do not know where to start in terms of managing funds.
Correct strategy
Identifying the correct investment strategy relies on several factors, which should be addressed through a financial-planning process.
The overarching purpose of the process is to manage an individual’s financial needs and/or objectives that could include a lifetime of care costs.
This often involves breaking down investment assets into three categories:
1) First of all, ensuring that there is a liquidity reserve, available to draw down immediately as required (‘needs’). This could be one year of expenditure.
2) The second pool of capital will fund a sustainable income, taking day-to-day expenses and future needs into account (‘wants’). The correct level of funds that should be deployed in this category will be determined principally by the amount of income that will be required. The intention is to try to ensure that this capital lasts for the individual’s lifetime.
3) A third portion of capital pertains to any additional available funds. It gives an extra layer of financial protection. This amount should be only be expended when the second pool of capital is exhausted.
Managing tax
A further complication is managing tax. Typically, for people who have suffered an injury that has left them permanently incapacitated, and they have been made a ward of court, they will not pay tax on their investment returns.
An investment manager should work with the individuals, families, their tax and legal advisers and/or trustees to ensure that the available tax exemptions are obtained and maintained.
For families that are dealing with an imminent exit from wardship, there are many issues to consider. A robust plan to manage their loved one’s assets is critical.
Specialist advice should be obtained to support clients who have received compensation after suffering a traumatic injury or illness, ensuring their compensation award is optimally managed to support the injured party and their loved ones over their lifetime.
Barry Kennelly is the tax lead in Davy Private Clients. Cedric Heather and Louise O’Connor are advisers in Davy Private Clients.