A Will with "Guidance". Problems?

Malthusian

It makes absolutely no difference to the donor's interests whether the attorneys draw £10k from their Premium Bonds, £10k from a savings account, or £5k from each. Either way their care fees get paid and the donor's interests are met.

In the absence of any "preferences", the attorneys have complete discretion to do any one of those things. There would be sound economic justifications for whichever they chose, which would have nothing to do with the inheritance.

I see no reason at all why the donor could not write in their preferences that they would prefer to draw from the two "pots" in equal proportions - it would not be necessary to say why.

One of the examples of a possible "preference" that OPG gives is "I would like to maintain a minimum
balance of £1,000 in my current account." God knows why you'd care how much is in your current account if you've lost capacity, as long as your attorneys aren't careless enough to let you go overdrawn. But if it makes you happy you can ask your attorneys to do that. Keeping £1,000 in the current account is in the donor's interest and not keeping £1,000 in the current account may be in the donor's interests as well (if, say, the attorneys can get a better rate of interest). This is the same thing. Out of a range of possible options, all of which would be equally in the donor's interest, it asks the attorneys to take one in particular.

Malthusian

Sea_Shell wrote: »

I'm guessing if that a PoA was acting 100% in the interest of the donor, they should spend the money in the order of the best return that money was achieving (as I would with my own money).

That is spend the money earning 0% interest (e.g. Premium Bonds) first, then that only earning 1% and so on, leaving the best paying accounts or investments to last.

Ah but it's more complicated than that, which is why I said there would be sound economic reasons for both.

Premium Bonds actually pay 1.15% interest on average, not 0%, but the nature of the prize draw means that you are very likely to get 0. So as attorney I could either spend down the Premium Bonds and say that it was because they were very unlikely to give any return over the donor's lifetime. Or I could spend down their savings account paying 1% and say it was because I'm spending the lower-yielding investment first and old ma was attached to her Premium Bonds.

Or I could draw them in due proportion to strike a balance between the two. The fact that my ma indicated a preference for this in her Power of Attorney is a bonus. The fact that it affects the disposition of her inheritance is not my problem.

All three options are equally in the donor's interest because their needs are paid for either way.

Let's say the choice is between Premium Bonds and a stocks and shares ISA. As Attorney I could spend the Premium Bonds on the basis that the return is lower. Or I could spend down the ISA on the basis that at the donor's stage of life it is better to reduce risk. Or strike a balance. It's the attorney's choice, and they can justify any of them, without any reference to the inheritance situation.

getmore4less

Yorkshireman99 wrote: »

There are very strict rules on what an attorney can, and more importantly can't do. The scheme proposed is a non starter.

The first strict rule is to follow the instructions left by the doner.

Chris75

getmore4less wrote: »

Just tell potential beneficiaries now what you would like and let them decide at the time.

keep the will simple and a side note if you really want with something along the lines of a,b,c are causes close to me that would appreciate a donation.

The beneficiaries can decide if they need to do a DOV to reduce IHT on your estate or can happily give from their new wealth or just not bother.

another simple approach is to set aside some asset(s) that can easily be adjusted as you go along, have that set aside for the charities in the will.

eg. if £50k would cover it then you could have premium bonds as the account holding the charity share, easily adjusted and ring-fenced until a POA may decide to cash them first.

This is what we have decided to do. A private letter, not part of the will at all, to the family telling them what my interests are etc.

We already do voluntary work.

Sea_Shell

At the end of the day, the chances of finding someone to be your PoA with wide-ranging financial acumen, is probably small.

Most will no doubt just muddle their way through dealing with the issues as best they can, without looking too deeply into the "bigger picture", as they will no doubt be dealing with the stress of their own lives and coping with, who may be, a poorly elderly relative at the same time.

It's a tough job.

Yorkshireman99

Malthusian wrote: »

Ah but it's more complicated than that, which is why I said there would be sound economic reasons for both.

Premium Bonds actually pay 1.15% interest on average, not 0%, but the nature of the prize draw means that you are very likely to get 0. So as attorney I could either spend down the Premium Bonds and say that it was because they were very unlikely to give any return over the donor's lifetime. Or I could spend down their savings account paying 1% and say it was because I'm spending the lower-yielding investment first and old ma was attached to her Premium Bonds.

Or I could draw them in due proportion to strike a balance between the two. The fact that my ma indicated a preference for this in her Power of Attorney is a bonus. The fact that it affects the disposition of her inheritance is not my problem.

All three options are equally in the donor's interest because their needs are paid for either way.

Let's say the choice is between Premium Bonds and a stocks and shares ISA. As Attorney I could spend the Premium Bonds on the basis that the return is lower. Or I could spend down the ISA on the basis that at the donor's stage of life it is better to reduce risk. Or strike a balance. It's the attorney's choice, and they can justify any of them, without any reference to the inheritance situation.

You are very wide of the mark. The Office of the Public Guardian do not expect attornies to do this sort of thing. I suggest you ask the OPG if your scheme is permitted.

Malthusian

Yorkshireman99 wrote: »

You are very wide of the mark. The Office of public guarian do not expect attornies to do this sort of thing.

Sorry, you're going to have to be more specific. Which sort of thing?

If a donor's free assets consist of anything more complicated than a single bank account then the attorneys are going to face this kind of choice regardless of whether the donor asks them to indulge a preference or not. Attorneys do not need the OPG's permission to encash investments.

getmore4less

A useful document

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/435932/Avoid_invalid_LPA.pdf

Linton

getmore4less wrote: »

The first strict rule is to follow the instructions left by the doner.

I dont believe this is true. The courts have decided that a donor cannot instruct the Attorney to carry out activities that are outside the scope of the authority of an attorney. This scope is to act in the interests of the donor. That is the over-riding criterion for anything the Attorney considers doing.

getmore4less

Linton wrote: »

I dont believe this is true. The courts have decided that a donor cannot instruct the Attorney to carry out activities that are outside the scope of the authority of an attorney. This scope is to act in the interests of the donor. That is the over-riding criterion for anything the Attorney considers doing.

The instructions have to be valid in the first place.

the notes on how to fill in a LPA give some guidance on the section 7 preferences and instructions.

https://www.gov.uk/government/publications/make-a-lasting-power-of-attorney/lp12-make-and-register-your-lasting-power-of-attorney-a-guide-web-version#a7