Reinvest parents money with power of atourney

1965dentist

I have financial power of attorney with my parents money. They have £100k siting in bank  doing nothing! Am I allowed to reinvest it? If so , where to start?

elsien

Does the power of attorney give any guidance as to how they would want you to manage their money?
What level of risk were they happy with when they were making ther own decisions? 
It may be sitting there doing nothing now,  but how soon may it be potentially needed, given that investments (if you're talking stocks etc) need to be longer term. 

JGB1955

Yes, you can invest it. Your duty is to act in your parents best interests.  Personally, I wouldn't go as far as investing in stocks and shares but would certainly look at savings accounts, bearing in mind the £85K financial security limits. It can be incredibly hard to open up new accounts with a POA. I'm afraid I"be stuck to NS&I accounts.for guaranteed security and ease of access.  I would have liked to be more adventurous but I have no idea of the timescale that the money will need to stay there.  ..

elsien

Have your read the OPG guidance?
https://www.gov.uk/government/publications/how-to-be-an-attorney/how-to-be-an-attorney-property-and-financial-decisions

Linton

Sorry if I am checking on things you already know, but Ithink you should be very wary taking advice on investing other people's money from people you do not know on the internet.  Be very careful.  You must do things by the book and be seen to do so.....

- Are your parents mentally capable?  You can only reinvest their money without their permission if they have been formally judged incapable of making such decisions for themselves.  In this case you do have the authority to move their money elsewhere, but if at all possible you should discuss it with them first.

 - As PoA your sole duty is to act only in their best interests.  For many old people investing their money in say shares, as opposed to using bank or NS&I savings accounts, is not in their best interests if their life expectancy is below the time period at which investing at a risk is justifiable. Even if there was no reason to believe their life expectancy  was a problem, if the £100K is enough for all their foreseeable needs investing at risk would be very difficult to justify. Acting in the possible beneficiaries' interest is outside the authority of an attorney.

 - What is the money for?  For example is it required to pay care costs?  This could have a significant impact on what may be appropriate.

in my view putting their money in say an NS&I savings account, with their permission if appropriate, would be fine and would not be questioned. If you were thinking of investing in funds or shares or taking any risk of any form I would strongly suggest you consult an IFA.  This is as much for your protection as theirs.

Zanderman

PoA is about managing the money appropriately.  If your parents have 100k in a bank and they have chosen not to invest it then it's probably not appropriate for you to invest it.  Investments carry risk and should only be done for the medium-long term.  You should not be taking risks and you should, if they're elderly, not be looking at long-term investment.

Put into interest earning account yes, but beyond that you really need to consider what your legal duties and responsibilities are as an attorney.

As an ex PoA attorney myself I have to say I, and my fellow attorney's decided it would be utterly wrong to risk our mother's cash - as she (and we, as managers of it for her) needed it to be risk-free and freely available for use in the next few years.  So it stayed in (various) bank accounts. 

Albermarle

I would have thought the OP's own experience as an investor would have some part to play ?
For example if the OP has little experience then using his POA to invest in the financial markets with his parents money would be inappropriate. However if they had experience and fully understood what they were doing/trying to achieve , then it could be more acceptable ?

Malthusian

Albermarle said:

I would have thought the OP's own experience as an investor would have some part to play ?
For example if the OP has little experience then using his POA to invest in the financial markets with his parents money would be inappropriate. However if they had experience and fully understood what they were doing/trying to achieve , then it could be more acceptable ?

The OP is required to invest their parents' money as a prudent businessperson would. If they don't have the level of experience and decision-making of a prudent businessperson they should take FCA-regulated professional advice.

The level of experience of the OP is pretty much irrelevant because the law obliges them to have a certain level of experience; if they don't have it in their own brain they can and should buy it in.

What is relevant - in the right circumstances - is the parents' own level of experience. Attorneys have a duty to use the donor's money as the donor themselves would have used it if they were still making decisions, providing that doesn't conflict with the overriding duty to invest their money in the donor's interests.

So in a borderline case, an experienced investor's Attorney might invest their spare capital in the stockmarket while the Attorney of someone who'd never held stockmarket investments would stick it in NS&I. (Borderline case means that neither investment risk nor higher inflation risk are clearly against the donor's interests.) The rule "if they've lived this long without needing to invest in the stockmarket, why start now" applies.

Notepad_Phil

1965dentist said:

I have financial power of attorney with my parents money. They have £100k siting in bank  doing nothing! Am I allowed to reinvest it? If so , where to start?

I think the answer to your questions will to a great degree depend on what other assets and what guaranteed income do they currently have?

If this is the majority of what they have and they are only in receipt of state pensions then I think most people would say that you should keep well clear of investing but instead look into how you could better the current probably miserly interest rate that the bank is likely offering them.

xylophone

Relative had PoA for his relative and managed a portfolio as well as a number of cash accounts.

However, the Donor had herself been a keen investor, the Attorney had been assisting her with financial matters long before the PoA needed to be brought into effect and he himself was an experienced investor.

In the OP's case, if he has no experience in investment and the Donor had no previous track record in that respect, then  I would have thought that (at least for the moment) achieving the best return possible from cash deposits would be the priority.

If there is  no loss of  capacity involved, then the OP should discuss the matter with the donor.
Otherwise, he might have a look here https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html (updated yesterday)

All savings tables

Easy access | Fixed rates | Cash Isas | Monthly income | Phone / Postal Junior Isas / children's | Offshore | National Savings | Premium Bonds

>> Research your own savings accounts

to see what is available. It might be useful to look at the NS and I Income bonds - the income could be paid monthly into another of the donor's accounts.

The OP should also be aware ( if he isn't already) that he will need to register the PoA with any financial institution he chooses to use - presumably he will not wish to let the original out of his sight unless he absolutely has to and therefore certified copies may need to be obtained.

jonrock

Here's my dilemma.
I have a lump sum to invest for my Mum. 
I have LPA in place and she doesn't have the capacity to make financial decisions.
It seems much more practical to invest the money in my name in regards to dealing with the account online etc.
Am I doing anything wrong by doing that? Something like the NS&I Growth bond fixed.
I'm currently arranging an annuity to cover care costs till end of life so I will be investing what is left.
If it is under me then the interest will be seen as taxable? My Mother also has an ISA so its a little hard to
know which way to go regarding tax allowances.
Regards