Cutting IHT as a Power of attorney

zogg

Hi,

My sister and myself have POA over my 94 year old father who has dementia.
His estate is currently worth 750k. We have been told upon his demise that my late mothers share if IHT can be added to dads making a total of 650k tax free. A friend has suggested we gift 6k to each of use each year as this would be tax free and legal. I am told this can be back dated for 1 year.

Can anyone advise on this move please ?

Regards

zogg

agrinnall

Sounds a bit dubious to me I'm afraid, unless there was clear evidence that such gifting was taking place before the POA was registered. Reducing IHT is not a benefit to your father, it's only a benefit to his estate (and by extension, to the beneficiaries).

booksurr

POA must be used for the benefit of the person concerned

your father has dementia. he is likely to need expensive care at a date in the future so reducing his wealth before that point is totally against HIS best interests

being a POA does not mean you can act in a selfish way to secure your own inheritance. Doing so could result in legal action against you personally

MichelleUK

Doing something like this is totally beyond what you are able to do acting as the power of attorney for your father without referring it to the Court. Read this about your responsibilities:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/287864/EPA101_Guidance_apply_register_EPA.pdf

Keep_pedalling

Unless he had a history of providing such gifts on an annual basis before he lost the ability to make his own decisions, then this would be an abuse of your power.

If it was possible the limit is actually £3000 not £6000.

Does or did you father recently own his own home? because the good news is that the main residence nil rate band kicks in this coming April, so if he owns his home or had to sell one to fund residential care, providing he dies at some point after the new financial year his estate will be within the nil rate band, so there will be no tax to pay.

Did you mother leave everything to your father?

le_loup

As has been said, your power is not to improve your own situation but to use any assets for the sole benefit of your father.