Using power of attorney

Perict

We have financial power of attorney for my wife's mother, who is in a care home with dementia. We have sold her house so she is now self funding. It has been suggested to us that we should, on her behalf, using her capital, buy a funeral plan now, and, also from her money, gift her grandchild £3000 per annum, and gift amounts of up to £250 to other relatives. This would have the effect of bringing forward the time when her assets would be depleted to the level that the local authority would have to start funding her care. Are these courses of action legal? And are there any downsides?

elsien

There are strict rules about using power of attorney for gifts, and I'm sure that giving grandchildren thousands per year would break this. As would a deliberate spend to bring the assets down.
You have a legal duty to act in the persons best interests, and giving large sums of their cash away would certainly breach the fiduciary duty. This could lead to the power of attorney being taken from you if someone complained. Worst case scenario is prosecution.
Quite frankly whoever suggested it has no idea what they are talking about.

Check the office of the public guardian website, I think fuller details are on there.

Edit - a brief summary with a link to guidance on gifts.
https://www.gov.uk/lasting-power-attorney-duties/property-financial-affairs

Torry_Quine

Buying a funeral plan is fine. Giving away money so as to recieve benefits is not, it's called deprivation of assets and your mother-in-law would be treated as if she still had the money. As her attorney you have to act in her best interests and giving away her money isn't.

elsien

Aside from the legalities, money gives your relative choices. If there are issues with the home it's far easier for a self funder to move than someone reliant on basic state funding. And paying a bit extra may give her a higher quality of care. Would you really want to deprive her of those options?

Keep_pedalling

You have been advised by an idiot, being a POA does not give you the power to give your MILs money away and to do so could land you in serious trouble. You can only use that money for her benefit and her benefit alone.

I should add that you can make limited gifts to individuals or charities. So if your MIL always gave some family members birthday and Chrismas gifts, or gave regularly to a charity you can continue to do so on her behalf but they would need to be at the same sort of value as she would have done when she was still managing her own affairs.

Yorkshireman99

Perict wrote: »

We have financial power of attorney for my wife's mother, who is in a care home with dementia. We have sold her house so she is now self funding. It has been suggested to us that we should, on her behalf, using her capital, buy a funeral plan now, and, also from her money, gift her grandchild £3000 per annum, and gift amounts of up to £250 to other relatives. This would have the effect of bringing forward the time when her assets would be depleted to the level that the local authority would have to start funding her care. Are these courses of action legal? And are there any downsides?

You cannot do any of those things as the POA does not allow them. Also the scheme would constitute deprivation of assets under DWP rules. Some small gifts are allowed but you need to check with the Court of Protection. The bottom line is to forget the whole idea. The person who advised you is an idiot.

System

Normally gifts are OK only if there is a history of the gifts being given

Gingernutty

The funeral plan is a good idea and would be allowed under the POA.

Gifts OF UP TO £3000 are acceptable only IF, as !!!!!! says, there is a history of gift giving.

The odd £20 or £50 for birthdays, christenings, Christmas, weddings etc - yes

Systematically draining the funds with £3000 'gifts' will be seen for what it is - deprivation of assets.

RADDERS

When my mums Aunt was in a care home a solicitor had POA and every year her and the other beneficiaries to her aunts will received a payment of £250 at Xmas and also £3000 split between the four of them. I cannot see a solicitor doing anything not above board.

PasturesNew

All of the above, plus:

Also - be aware that as a self-funder, if the funds were to become depleted, that home may no longer wish to accommodate her - and you have a risk that she'll be moved to "a random home on the Council's list that happens to have a bed when the home turf her out".

Each home has its own way of working - we checked when we moved mum into a care home to find out what their policy was on "running out of money".

It'd be cruel to have her moved, away from her new friends, because the money ran out as you all went to Disneyland and bought new shoes.

The Council doesn't just "pick up the tab". They have an approved list of homes they use; homes they have set contracts with for X number of rooms. If a self-funder runs out of money then the home she's in MIGHT transfer her onto the Council contract, but it might not be able to, or willing to.

Yorkshireman99

RADDERS wrote: »

When my mums Aunt was in a care home a solicitor had POA and every year her and the other beneficiaries to her aunts will received a payment of £250 at Xmas and also £3000 split between the four of them. I cannot see a solicitor doing anything not above board.

That is a clear beach of the rules. Payments must be for the direct benefit of the donor. Also it is obvious asset deprivation. The solicitor was simply wrong. He was lucky not to haves been caught. There regulation is not as effective as it might be.