How far does executor need to look at money spent by the deceased in the last 7 years

Keep_pedalling

securityguy wrote: »

The £3000 limit is not the only way to spend money.

You are entitled to spend income, without limit, controls on purpose or consideration of who benefits, provided it does not affect your standard of living. There's a lack of case law about giving away all your income whilst living on capital, but presumably it would be handled case by case, and would need professional advice.

So if, as a lot of pensioners are, you are a net saver, you can give that money away without it being subject to the 7 year rule. The citation is Inheritance Tax Act 1984 S.21(1). You would need professional advice as to what counts as "income".

In the case of the OPs aunt she could give any income over £36,000 without worrying about the 7 year rule, but I doubt many pensioners have incomes that high.

If we were frugal we could give income away, but we have expensive tastes in holidays, so that is out of the question.

securityguy

"In the case of the OPs aunt she could give any income over £36,000 without worrying about the 7 year rule, but I doubt many pensioners have incomes that high."

It's hardly implausible for the generation that has defined benefit pensions. Forty years' service in a bank or other large company finishing on the equivalent in today's money of £54 000 is hardly riches beyond the dreams of avarice. Forty years' service in the public sector finishing on today's equivalent of £72 000 is less common, but hardly exotic: all GPs, all doctors above staff grade registrars, professorial grades in universities, secondary heads and (possibly) deputy heads, civil servants of reasonable but not massive seniority. Many solicitors, accountants, surveyors and so on.

It's even more likely for widows and widowers of two-income families, as they will have their own pension plus half their spouse's. And of course, for couples both of whom worked and both of whom pensions on this scale, it all goes a fortiori. That there are a lot of pensioners in desperate financial straits doesn't mean there aren't a lot of pensioners with high incomes.

mwalter51

"I assume your aunt knows what she is doing? If she just knows she has money and is telling you to spend it without understanding the consequences then it would be a different matter."

Yes, she is perfectly aware of what is going on. I would not let her spend or give away her money so that she could not afford to support herself.

I watch her money closely to make sure it isn't wasted. We had to go the to extreme of moving her from one nursing home last April because I could not stop them from tacking on every expense under the sun and withdrawing whatever they liked from her bank account. I decided enough was enough when the monthly bill topped £10,000 per month.

So no, I am not just spending her money for her without her knowledge or approval. But she wants to spend it and I just trying to determine what it can be spent on given the tax rules.

mwalter51

"I cannot think you are her attorney as you live in Canada, and it reads as though your aunt is in a nursing home in the UK, but stranger things have been known."

Yes, I am her LPA! (You just learned something new! ) The LPA document was legally drawn up and registered by my aunt's solicitor and has been recognized by banks, government agencies and such. It is real and is in place. You aren't the first person who didn't believe it could be done.

"If she wishes to buy you a gift, or give you money, then that is her choice. But to be working out how family and friends can spend an old lady's money and keep it under the radar seems a bit grasping to me. "

You misunderstand me. My aunt is wanting to spend her money rather than give it to the taxman once she has died. I know she just can't "give it away" to avoid tax and now I am learning that there's a limit to the gifts she can give away. I am simply wanting to know what she can spend the money on which won't break any laws and will avoid attracting tax.

There's nothing grasping about anything going on here. I am simply not aware of the rules and regulations in the UK and I need to ask questions to get the right answers. If those question sound "grasping" then I am sorry. But if I don't ask questions, I will not know what is the proper course of action to be taken. As LPA, I am trying to educate myself.

I can live on in my Canadian ignorance where we don't have any such thing as inheritance tax and just let my aunt go off spending her money or giving monetary gifts away and just think that's okay, or I can ask tough questions. It would never have crossed my mind that I would need to keep records of what she spends her money on. So I learned something here.

So please don't judge me and think I am simply after her money. I just want to educate myself and thought this would be a good place to start asking questions as I haven't been getting answers yet from the solicitor or accountant.

troubleinparadise

I am glad to read your aunt has an LPA in place, along with a solicitor and accountant to manage her affairs. That wasn't clear from your opening post.

The accountant really is your first port of call for information about inheritance tax and the rules surrounding it. As the attorney you should be able to get answers to these questions - I'd chase him/her up a bit more strongly to get the correct picture as it sounds as though he would need to know for annual tax returns and so on.

Yorkshireman99

mwalter51 wrote: »

"I cannot think you are her attorney as you live in Canada, and it reads as though your aunt is in a nursing home in the UK, but stranger things have been known."

Yes, I am her LPA! (You just learned something new! ) The LPA document was legally drawn up and registered by my aunt's solicitor and has been recognized by banks, government agencies and such. It is real and is in place. You aren't the first person who didn't believe it could be done.

"If she wishes to buy you a gift, or give you money, then that is her choice. But to be working out how family and friends can spend an old lady's money and keep it under the radar seems a bit grasping to me. "

You misunderstand me. My aunt is wanting to spend her money rather than give it to the taxman once she has died. I know she just can't "give it away" to avoid tax and now I am learning that there's a limit to the gifts she can give away. I am simply wanting to know what she can spend the money on which won't break any laws and will avoid attracting tax.

There's nothing grasping about anything going on here. I am simply not aware of the rules and regulations in the UK and I need to ask questions to get the right answers. If those question sound "grasping" then I am sorry. But if I don't ask questions, I will not know what is the proper course of action to be taken. As LPA, I am trying to educate myself.

I can live on in my Canadian ignorance where we don't have any such thing as inheritance tax and just let my aunt go off spending her money or giving monetary gifts away and just think that's okay, or I can ask tough questions. It would never have crossed my mind that I would need to keep records of what she spends her money on. So I learned something here.

So please don't judge me and think I am simply after her money. I just want to educate myself and thought this would be a good place to start asking questions as I haven't been getting answers yet from the solicitor or accountant.

I am not suggest any wrongdoing on your part but you may have been badly served by the solicitor involved. The notes about what the attorney can and cannot do should have been explained to you. The LPOA certainly does not allow you to give away funds willy nilly. My only other question would be how you can have a LPOA unless you have a UK address. AIUI the attorney has to live within the jurisdiction of the Court of Protection but I am open to correction.

BobQ

Yorkshireman99 wrote: »

I am not suggest any wrongdoing on your part but you may have been badly served by the solicitor involved. The notes about what the attorney can and cannot do should have been explained to you. The LPOA certainly does not allow you to give away funds will nilly. My only other question would be how you can have a LPOA unless you have a UK address. AIUI the attorney has to live within the jurisdiction of the Court of Protection but I am open to correction.

You can be an Attorney and live abroad. It does have some potential pitfalls but there is no legal reason why not if you are capable and solvent. It is more common if there are two Attorneys with one based in UK and one abroad. Lets face it with Skype and electronic banking it is increasingly easy to do many things from outside the UK.

BobQ

[QUOTE=mwalter51;71707357
Yes, she is perfectly aware of what is going on. I would not let her spend or give away her money so that she could not afford to support herself. ..........

So no, I am not just spending her money for her without her knowledge or approval. But she wants to spend it and I just trying to determine what it can be spent on given the tax rules.[/QUOTE]

That is fine then. I had a similar situation (albeit not on the same scale) when the donor had the attitude of "you cannot take it with you" and wanted to spend but I had a legal obligation as the LPA. Its a case of not only doing what the donor wants but ensuring that you can justify it to others if required.

Yorkshireman99

BobQ wrote: »

You can be an Attorney and live abroad. It does have some potential pitfalls but there is no legal reason why not if you are capable and solvent. It is more common if there are two Attorneys with one based in UK and one abroad. Lets face it with Skype and electronic banking it is increasingly easy to do many things from outside the UK.

It was not the practicalities that concerned me but the law. I understood that the attorney had to be resident within the jurisdiction of the Court.

cbrown372

£3,000 a month for her nursing home fees and other expenses seems very small, maybe she should be encouraged to spend some money on herself for some luxuries?