Power of Attorney and Inheritance Tax question

Tabatha2008

Hi

I have recently become Power of Attorney over my father's finances, and have been looking at all his statements etc., He has an awful lot of money invested in Inscape (part of Abbey); the majority of which is in a Fast Access Account. I have been told by members of my family that I should distribute the money equally into several trusts to avoid paying Inheritance Tax on his estate when he passes away, but am unsure whether I have the power, or authority to do that.

Any help would be greatly appreciated.

thanks

John_Pierpoint

My comments:

First step is to find out exactly what sort of fund it is and put a value on it.
This looks like sensible advice about the dangers of having too many eggs in the one basket:
http://www.moneysupermarket.com/community/forums/t/abbey-inscape-now-premium-investment-26377.aspx

Step two:
Make a list valuing everything your father owns PLUS any beneficial interest he may have in Trusts. Then make a realistic assessment of how long he will live.

Step three:
Learn the basics of trusts. "Which?" published a good basic guide.
BUT it has not been updated to reflect the changes Gordon Brown made in a panic in autumn 2007, allowing husbands and wives to pool their zero rate IHT bands. (Click the image and you will be allowed to flick through some pages).

http://www.amazon.co.uk/Giving-Inheriting-Which-Essential-Guides/dp/1844900320/ref=pd_cp_b_1?pf_rd_p=212521391&pf_rd_s=center-41&pf_rd_t=201&pf_rd_i=1844900169&pf_rd_m=A3P5ROKL5A1OLE&pf_rd_r=11AA872PTE5FH8E3FFH5

Step four.

When you, and more particularly your family, understand what trusts are, post a detailed question full of facts and figures on the correct part of this site.

Advice given, by the likes of "localhero", tends to be pretty good and up to date.
Just do an advanced search on localhero or "find more posts by" and then make up your own mind about what you are being told.

Inheritance Tax is pretty difficult to dodge these days, especially if the planning is left to within 7 years of death, and there are several traps that can result in the estate paying MORE tax if you get it a bit wrong!
Don't.forget that a "trust" is a legal entity that is likely to need its own legal & tax advice, all of which costs money.

jaynes2326

Remember that as Attorney you have a duty to safeguard the donor's assets. You may open yourself to civil or criminal action if you disperse assets, even if with the best of intentions.

CLAPTON

jaynes2326 wrote: »

Remember that as Attorney you have a duty to safeguard the donor's assets. You may open yourself to civil or criminal action if you disperse assets, even if with the best of intentions.

curious about this... if he failed to protect these assets by leaving them all in one basket, would he leave himself open to civil or criminal action?

tyllwyd

When jaynes2326 said 'safeguard' the assets, I thought he meant safeguard as in protecting them from theft (ie moving the money into accounts in other people's names) rather than protecting them from loss caused by an external event, say, the failure of a bank.

greyteam1959

And my comments......for what they are worth......
Get yourself a solicitor
and thats meant in the nicest possible way

jaynes2326

I meant safeguard as in keep them in dad's name, not putting them in trust for other people. The point about ensuring the money is protected by not putting all the eggs in one basket is a good one.

Have a re-read of the notes on the front of the Power of Attorney. It gives you an overview as to what sort of things you can and can't do with the money. And yes, if unsure, consult a solicitor.

If you really want to gift money away to minimise dads estate for IHT purposes then you could apply to the Court of Protection for permission to do so. It all depends on the circumstances.

localhero

John_Pierpoint wrote:

Advice given, by the likes of "localhero", tends to be pretty good and up to date.

Thank you John _Pierpoint. :beer:

tabatha2008 wrote:

I have been told by members of my family that I should distribute the money equally into several trusts to avoid paying Inheritance Tax on his estate when he passes away, but am unsure whether I have the power, or authority to do that.

Hi Tabatha2008,

If it's not too late, I would advise that your father states specifically in a new LPA that you are entitled to make gifts/carry out tax planning - though you are entitled to make gifts to yourself/other family members if it follows an established pattern. Otherwise for more substantial transactions, there's the real danger that HMRC would argue that the tax planning is void, and secondly there's the potential for other family members to argue that you are acting outside of your remit.