Lasting Power of Attorney

Keep_pedalling

Loosing you mental capacity through accident or illness can cause massive problems for you loved ones, so  it would be wise for most adults to put financial LPAs in place. We have had them in place for a good few years, but have never needed to use them but they there if needed so no one is going to have to apply to the courts to obtain deputyship should the worse happen.

Albermarle

daveyjp said:

Its far easier to DIY now its online.

Once complete and printed you just need to go through each page, identify where a signature is required and note which person needs to sign each box.

You need the applicant, the people who will act, witnesses and a further individual who knows the applicant and confirms they entered into the POA knowing what it was and they weren't coerced.

I believe that in Scotland this has to be a GP, solicitor etc .
However not necessary in England and Wales.
Although it would probably be a good idea anyway, if there was a possibility that other relatives might later say the person was forced into/already not mentally capable of knowing what they were signing etc .

Nebulous2

It is slightly different in Scotland - so make sure you are following the right guidance if you are in Scotland. 

Worth pointing out that as far as finances are concerned it isn't all about incapacity. Where one partner is unavailable at key points to sign documents (offshore workers for instance) then it is quite common to give their partner POA to act on their behalf when they aren't around. 

Pat38493

german_keeper said:

The only problem we have really had is highly unlikely to affect many. Mum was sectioned in March 2020 and following that has been fully funded under Section 117 as she "is a danger to herself or others". Her monthly income is about £3k and her normal living expenses maybe about £500 per month. This is mainly just petty cash for the Nursing Home when they take her out and birthday and Xmas gifts to family. 

So of course IHT has reared it's ugly head and we are maybe a couple of years away from this becoming an issue if she is still with us. We have looked into gifts from normal income and a good friend of my sister, who happens to be a solicitor who specialises in this area, has confirmed that our situation fits the criteria. However the issue is with the POA. It doesn't give you carte blanche to do whatever you want; it is about doing what you believe the individual concerned would have done if they still had mental capacity.
    

Is this because she has built up a huge balance in her accounts which will go over the IHT threshold or because of property, or both?  

I'm a bit surprised the solicitor is saying that because that sounds exactly like what this document should be used for.  To my mind, the argument is that your Mother would have done that decision if she was being fully funded and had all that money in the bank.  Saying that she couldn't have foreseen the scenario could apply to anything - you could also say that soneone didn't foresee that they would become unable to make their own decisions which invalidates the entire point of POA existing in the first place.

elsien

I work with people who lack capacity, some of whom it’s very unexpected for because they are comparatively young and they’re in an accident. Without it there is no legal way to access their bank account or get any financial information other than as a DWP for any benefits. Any bank mandates that are set up when the person has capacity ceased to be In effect when they lose capacity. 

This is a safeguard for the person because they can’t monitor their bank accounts anymore to check what is going on.Deputyship takes months; in one case I was working with it was closer to 2 years  - They were single, no one had any right to access the house to collect any belongings, or to find any financial information and they were left in a care home with no money to pay for the extras such as clothing, preferred toiletries, chiropody etc.
Another person had teenage children who were dependent on her, but they couldn’t access her account to pay the rent or buy food or anything. Make an LPA. It saves all manner of strife.

 It can also make life a lot easier if you still have capacity around your finances but you have physical difficulty getting to the bank, or contacting people on the phone, or a number of reasons. My grandmother let my dad do everything simply because she just couldn’t be bothered anymore, she was too tired even though she had all her marbles. In those circumstances you can pick and choose what you want to do for yourself and what you want other people to do for you.

Nebulous2

Pat38493 said:

german_keeper said:

The only problem we have really had is highly unlikely to affect many. Mum was sectioned in March 2020 and following that has been fully funded under Section 117 as she "is a danger to herself or others". Her monthly income is about £3k and her normal living expenses maybe about £500 per month. This is mainly just petty cash for the Nursing Home when they take her out and birthday and Xmas gifts to family. 

So of course IHT has reared it's ugly head and we are maybe a couple of years away from this becoming an issue if she is still with us. We have looked into gifts from normal income and a good friend of my sister, who happens to be a solicitor who specialises in this area, has confirmed that our situation fits the criteria. However the issue is with the POA. It doesn't give you carte blanche to do whatever you want; it is about doing what you believe the individual concerned would have done if they still had mental capacity.
    

Is this because she has built up a huge balance in her accounts which will go over the IHT threshold or because of property, or both?  

I'm a bit surprised the solicitor is saying that because that sounds exactly like what this document should be used for.  To my mind, the argument is that your Mother would have done that decision if she was being fully funded and had all that money in the bank.  Saying that she couldn't have foreseen the scenario could apply to anything - you could also say that soneone didn't foresee that they would become unable to make their own decisions which invalidates the entire point of POA existing in the first place.

The concern is that the attorney will be looking after their own interests rather than that of the person they are attorney for. 

There is a lot of guidance on this :-  OPG2: Giving gifts for someone else (web version) - GOV.UK (www.gov.uk)

and you can always contact the office of the public guardian for permission / advice. 

At work I had a talk from the OPG on their role and situations they had been presented with and these were eye-opening. Someone who wanted to buy himself a Ferrari with his mother's money. Someone else who wanted to 'pay for' a foreign wife for his son who had been in a life-changing road accident. 

Keep_pedalling

german_keeper said:

We set up POA for our mum several years ago. About 3 years ago we (mainly me) had to go through the process to take over her affairs. We found that she had money all over the place but fortunately had records of everything. I probably dealt with about a dozen or so different companies and the process varied a lot.

Halifax were brilliant; original call answered almost straight away, the advisor was very pleasant, knowledgeable and professional (maybe luck of the draw); upload a copy of the POA document and that covered Lloyds and Scottish Widows too. The other extreme was Close Brothers who insisted on everything in writing and a copy of the POA document stamped and signed by a solicitor. But having said that nothing too onerous and overall the process was fairly painless and I was quite impressed with all the companies and public sector organisations I dealt with. On an ongoing basis so far all seems to be working like clockwork.

The only problem we have really had is highly unlikely to affect many. Mum was sectioned in March 2020 and following that has been fully funded under Section 117 as she "is a danger to herself or others". Her monthly income is about £3k and her normal living expenses maybe about £500 per month. This is mainly just petty cash for the Nursing Home when they take her out and birthday and Xmas gifts to family. 

So of course IHT has reared it's ugly head and we are maybe a couple of years away from this becoming an issue if she is still with us. We have looked into gifts from normal income and a good friend of my sister, who happens to be a solicitor who specialises in this area, has confirmed that our situation fits the criteria. However the issue is with the POA. It doesn't give you carte blanche to do whatever you want; it is about doing what you believe the individual concerned would have done if they still had mental capacity.

Now apart from the section 117 issue, which we weren't even aware of when mum was still well, there was no way that she would ever have been anywhere near IHT threshold as she would either be still at home or paying for care, so it was never something we discussed. The solicitor did say that a signed statement from her authorising gifts from normal income in this situation would cover it. But of course the vast majority of people are never going to foresee such a situation. If she is still with us in a couple of years it is something we will have to address and the advice was that it can be quite a complex and costly process.      

If she does not have the mental capacity to make rational decisions then it is beyond am attorneys powers  to make gifts unless she had a history of making such gifts even if she has the assets to cover them.

Are you sure her estate is likely to hit IHT levels? If she previously owned a home before being sectioned her exemptions could be as much as £500k with the residential NRB, and if she is a widow it could be up to £1M.

Pat38493

Keep_pedalling said:

german_keeper said:

We set up POA for our mum several years ago. About 3 years ago we (mainly me) had to go through the process to take over her affairs. We found that she had money all over the place but fortunately had records of everything. I probably dealt with about a dozen or so different companies and the process varied a lot.

Halifax were brilliant; original call answered almost straight away, the advisor was very pleasant, knowledgeable and professional (maybe luck of the draw); upload a copy of the POA document and that covered Lloyds and Scottish Widows too. The other extreme was Close Brothers who insisted on everything in writing and a copy of the POA document stamped and signed by a solicitor. But having said that nothing too onerous and overall the process was fairly painless and I was quite impressed with all the companies and public sector organisations I dealt with. On an ongoing basis so far all seems to be working like clockwork.

The only problem we have really had is highly unlikely to affect many. Mum was sectioned in March 2020 and following that has been fully funded under Section 117 as she "is a danger to herself or others". Her monthly income is about £3k and her normal living expenses maybe about £500 per month. This is mainly just petty cash for the Nursing Home when they take her out and birthday and Xmas gifts to family. 

So of course IHT has reared it's ugly head and we are maybe a couple of years away from this becoming an issue if she is still with us. We have looked into gifts from normal income and a good friend of my sister, who happens to be a solicitor who specialises in this area, has confirmed that our situation fits the criteria. However the issue is with the POA. It doesn't give you carte blanche to do whatever you want; it is about doing what you believe the individual concerned would have done if they still had mental capacity.

Now apart from the section 117 issue, which we weren't even aware of when mum was still well, there was no way that she would ever have been anywhere near IHT threshold as she would either be still at home or paying for care, so it was never something we discussed. The solicitor did say that a signed statement from her authorising gifts from normal income in this situation would cover it. But of course the vast majority of people are never going to foresee such a situation. If she is still with us in a couple of years it is something we will have to address and the advice was that it can be quite a complex and costly process.      

If she does not have the mental capacity to make rational decisions then it is beyond am attorneys powers  to make gifts unless she had a history of making such gifts even if she has the assets to cover them.

Are you sure her estate is likely to hit IHT levels? If she previously owned a home before being sectioned her exemptions could be as much as £500k with the residential NRB, and if she is a widow it could be up to £1M.

So unless you can prove otherwise, you must assume that a rational person would prefer their money to go to HMRC rather than gifting it to their children if that was an option?

I don’t have a history of gifting money to my kids but that doesn’t mean that I wouldn’t do it if I was put in a situation where it would reduce my IHT bill - surely this is what anyone rational would do?

I guess to me it’s also relevant whether the person is likely or possible to recover - if they have dementia or another terminal condition and there is no chance that they will regain the ability to make those decisions, that’s different as well.

It’s a strange world we live in.  I don’t see that anything comparable to buying a Ferrari, but there you go.

eskbanker

Pat38493 said:
So unless you can prove otherwise, you must assume that a rational person would prefer their money to go to HMRC rather than gifting it to their children if that was an option?

I don’t have a history of gifting money to my kids but that doesn’t mean that I wouldn’t do it if I was put in a situation where it would reduce my IHT bill - surely this is what anyone rational would do?

https://www.gov.uk/government/publications/giving-gifts-a-guide-for-deputies-and-attorneys/opg2-giving-gifts-for-someone-else-web-version#who-can-you-give-gifts-to-and-when is quite specific about legitimate gifting, and IHT planning is clearly not either of these:

4. Who can you give gifts to and when?

Unless the power of attorney or deputy order says otherwise, you can make a gift only if it’s either:

• to a family member, friend or acquaintance of the person on a ‘customary occasion’

• to a charity

In both cases, it’s essential the gift is of reasonable value given the size of the person’s estate (all the money and property they own).

4.1 ‘Customary occasion’

A customary occasion means, for example, a birth, a birthday, a wedding or civil partnership or an anniversary.

It also includes occasions where families, friends or associates customarily give gifts, such as Christmas, Eid, Diwali, Hanukkah or Chinese new year.

Pat38493

eskbanker said:

Pat38493 said:
So unless you can prove otherwise, you must assume that a rational person would prefer their money to go to HMRC rather than gifting it to their children if that was an option?

I don’t have a history of gifting money to my kids but that doesn’t mean that I wouldn’t do it if I was put in a situation where it would reduce my IHT bill - surely this is what anyone rational would do?

https://www.gov.uk/government/publications/giving-gifts-a-guide-for-deputies-and-attorneys/opg2-giving-gifts-for-someone-else-web-version#who-can-you-give-gifts-to-and-when is quite specific about legitimate gifting, and IHT planning is clearly not either of these:

4. Who can you give gifts to and when?

Unless the power of attorney or deputy order says otherwise, you can make a gift only if it’s either:

• to a family member, friend or acquaintance of the person on a ‘customary occasion’

• to a charity

In both cases, it’s essential the gift is of reasonable value given the size of the person’s estate (all the money and property they own).

4.1 ‘Customary occasion’

A customary occasion means, for example, a birth, a birthday, a wedding or civil partnership or an anniversary.

It also includes occasions where families, friends or associates customarily give gifts, such as Christmas, Eid, Diwali, Hanukkah or Chinese new year.

Not sure if it’s been tested in court, but you could argue that “occasions where families, friends or associates customarily give gifts” includes Inheritance planning.  I’m guessing from what you are saying that there has been a court case about this and it was decided that it’s not?

LOL so as well as getting these POA set up, me and my wife and kids need to start occasionally transferring large sums between each other around birthday times to establish the precedent - we always give each other 10K for birthdays!