Lasting Power of Attorney

eskbanker

Pat38493 said:
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?

I'm not saying anything about court cases and was simply quoting official OPG guidance!  Categorising IHT planning as a 'customary occasion' seems something of a stretch though, in the context of the above definition....

german_keeper

We (my 2 sisters and me) have taken the POA responsibility very seriously. Everything we do with mum's money we discuss at length and try to find some sort of precedent before we decide what to do. So as an example once a year for the last 10 years or so all the immediate family, children, grand children and great grandchildren, have gone away for a weekend. Initially we all paid for ourselves but the last twice before mum got ill she paid for it all. 

Although at the time IHT was not a consideration she did talk a lot about how financially she was very comfortable and she enjoyed spending money on treating her family. We took her with us to Richmond in North Yorkshire the first time after she got ill. A stunning house in a lovely place thinking she would enjoy it and it was priceless if a bit stressful. "What the bl**dy hell are we doing here, you lot are all bl**dy stupid". So since she went into a home she hasn't been with us but has still paid for it.

The whole family used to regularly go out for a meal and in the years before she got ill she insisted on paying the bill. So when we take her out for tea every Wednesday she pays for it. She doesn't know that she is paying for it because as far as she is concerned her money is the plastic coins and false notes she has in her purse. Incredibly realistic they are as well!!  

On several occasions before she got ill she would lend family members money if they needed it. My 2 nieces, who have both struggled financially, never bought a nappy in their lives when their kids were young. That was Nanna's job. When my three were young she bought them 2 trampolines because she loved sitting in our lounge looking through the patio doors watching them enjoy themselves on the trampoline. When the first one started getting a bit shabby she insisted on buying a new one even though I said that one was fine. Lots of other examples of things that she did and said before she got ill that we try to use before making a decision. Our 2 aunts are regularly consulted on these decisions.

With regard to the gifts out of normal income to avoid IHT issue me, my 2 sisters and my 2 aunts (mum's sisters) all agree that she would be absolutely horrified at the thought of some of her money going to the taxman rather than her three kids. But we don't know that because, as previously explained, we never discussed the issue. I am one of those odd people who believes wholeheartedly in IHT as the fairest tax of all, but of course my 2 sisters and aunts have a more normal view of the subject. So although we all have our opinion of what mum would think, for all we know mum might have had a similar opinion to me but have also been far more fanatical on the subject than I am.

Overall I think POA is not something that should be taken lightly and all decisions should be thought through very carefully. Fortunately we are a very close family and we don't have some black sheep desperataly trying to get his/her hands on mum's money to buy a Ferrari or something!! 

saucer

You could of course argue that the IHT is in play largely because of government funded continuing care. Most people with dementia don’t get that, even when they need lonterm care, so you could see it as swings and roundabouts 

Daniel54

Pat38493 said:

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!

The overriding duty of an attorney is only to act in the best interests of the donor.This can be quite a burden of responsibility but  is laid down in law

It is not to second guess what the donor might themselves have wished to do. .Nor is it to reduce the IHT liability of the sponsors estate

The guidance quoted by eskbanker is actually clear in what is allowable as gifts under a POA.You would obviously be in breach of your duties if as attorney you increased a regular birthday gift from £50 to £10,000.Better not to go there and stick to the guidance.

Also,don't underestimate how quickly care costs can erode a surplus over an IHT threshold.My late aunt was paying over £8k per month and when I saw her last summer her concern was whether she had enough money, which I was able to assure her as attorney that she had enough to last until she was well over a 100.The fact she passed away not long after is and was beside the point.

Also,the health POA can be enormously helpful when advocating on behalf of the donor with, for instance, hospitals and social services.So do get both done ,none of us knows what is around the corner.

I gift monthly to both my adult children and would fully expect this to continue should I lose competence and they have to take over my financial affairs .It is is line with the guidance ( and reduces IHT)









 

german_keeper

saucer said:

You could of course argue that the IHT is in play largely because of government funded continuing care. Most people with dementia don’t get that, even when they need lonterm care, so you could see it as swings and roundabouts 

Don't really understand what you mean by "swings and roundabouts". In my mum's case IHT is in play not largely but entirely because of Section 117 which is different to CHC. Section 117 is, as I understand it, usually relevant to much younger people with serious mental health problems. In extreme cases it applies to dementia. She has a social worker, a consultant and an NHS care coordinator. Also, and not always the case under section 117, the state pays for a 1 to 1 carer. We wish she didn't have any of these.

Me and my 2 sisters would give up all the inheritance to have our mum even suffering from "normal" dementia if there is such a thing. Apologies to anyone with relatives suffering from dementia that I have offended if that is the wrong language to use.  

bownyboy

Me (50) and my wife (57) have filled out POA for both Health & Wellbeing and Financial for each other. It was all done online using .gov.uk website and was very straightforward.

For us its peace of mind. We discussed our medical wishes and had them detailed in the POA. 

We've filed them away knowing it's one less thing we would have to think about should the need arise. 

Having had to deal with parents who had no wills or POA we both know the agony, stress and sadness trying to guess what people would want.

I recommend everyone does it. 

saucer

german_keeper said:

saucer said:

You could of course argue that the IHT is in play largely because of government funded continuing care. Most people with dementia don’t get that, even when they need lonterm care, so you could see it as swings and roundabouts 

Don't really understand what you mean by "swings and roundabouts". In my mum's case IHT is in play not largely but entirely because of Section 117 which is different to CHC. Section 117 is, as I understand it, usually relevant to much younger people with serious mental health problems. In extreme cases it applies to dementia. She has a social worker, a consultant and an NHS care coordinator. Also, and not always the case under section 117, the state pays for a 1 to 1 carer. We wish she didn't have any of these.

Me and my 2 sisters would give up all the inheritance to have our mum even suffering from "normal" dementia if there is such a thing. Apologies to anyone with relatives suffering from dementia that I have offended if that is the wrong language to use.  

Apologies for my mistake regarding your mum receiving 115 aftercare, not continuing care. NHS S115 aftercare is available after being subject to the Mental Health Act.  My only point was that NHS care comes from the same pot that we all pay into through taxation. I have no doubt that you would have been much happier if this entitlement had never been needed.  

Pat38493

One other question - I think there was a comment above that you have to lodge a report of everything you have done each year under the POA?  Or was that only if you don't have one and have to apply through the courts for a Depputyship?

From the comments on gov.uk , it seems like for an LPOA, you don't need to submit any kind of regular report, but you should keep records of "major decisions" made.  Normally your actions would not be challenged unless someone complains about it or raises a concern - that's what is implied?

I ask because I'm not sure I want one of these if it means that some kind of government agency can ask me to prove that I'm acting in my spouse's best interests when they have never met her and I have lived with her for decades.

Also there was a bit of discussion above along the lines of "we are not sure if we should do that as it was never discussed with them" - what if it was discussed but only verbally?  For example what if you discussed with your spouse many times the intention to gift money to children to help with a house deposit, but obviously they have not actually transacted it before because this only tends to be done once in a lifetime?  On the one hand, if it's your spouse, you are in a better position to know their wishes than any government regulator.  On the other hand, most people don't keep a written signed record of their verbal discussions with their partner.

Linton

Pat38493 said:

One other question - I think there was a comment above that you have to lodge a report of everything you have done each year under the POA?  Or was that only if you don't have one and have to apply through the courts for a Depputyship?

From the comments on gov.uk , it seems like for an LPOA, you don't need to submit any kind of regular report, but you should keep records of "major decisions" made.  Normally your actions would not be challenged unless someone complains about it or raises a concern - that's what is implied?

I ask because I'm not sure I want one of these if it means that some kind of government agency can ask me to prove that I'm acting in my spouse's best interests when they have never met her and I have lived with her for decades.

Also there was a bit of discussion above along the lines of "we are not sure if we should do that as it was never discussed with them" - what if it was discussed but only verbally?  For example what if you discussed with your spouse many times the intention to gift money to children to help with a house deposit, but obviously they have not actually transacted it before because this only tends to be done once in a lifetime?  On the one hand, if it's your spouse, you are in a better position to know their wishes than any government regulator.  On the other hand, most people don't keep a written signed record of their verbal discussions with their partner.

Reports are not required for PoA, just deputyship.

Keep_pedalling

Pat38493 said:

One other question - I think there was a comment above that you have to lodge a report of everything you have done each year under the POA?  Or was that only if you don't have one and have to apply through the courts for a Depputyship?

Only required for deputyship

From the comments on gov.uk , it seems like for an LPOA, you don't need to submit any kind of regular report, but you should keep records of "major decisions" made.  Normally your actions would not be challenged unless someone complains about it or raises a concern - that's what is implied?

I ask because I'm not sure I want one of these if it means that some kind of government agency can ask me to prove that I'm acting in my spouse's best interests when they have never met her and I have lived with her for decades.

Also there was a bit of discussion above along the lines of "we are not sure if we should do that as it was never discussed with them" - what if it was discussed but only verbally?  For example what if you discussed with your spouse many times the intention to gift money to children to help with a house deposit, but obviously they have not actually transacted it before because this only tends to be done once in a lifetime?  On the one hand, if it's your spouse, you are in a better position to know their wishes than any government regulator.  On the other hand, most people don't keep a written signed record of their verbal discussions with their partner.

The rules are fairly simple, once someone has lost mental capacity, you have to act in their best interests alone, you cannot make gifts based on conversations you have had in the past. If people want to help their children with gifts then if they have the means to do so then they do it rather than talk about it. If they did not gift because they could not afford to do so them it is highly likely that the savings they do have may still be needed for their own needs so giving it away would be classed as deliberate deprivation of assets.

The reason these rules exist is to avoid the temptation to use up the donors assets before they can used to pay for the donors care, or an attempt to avoid IHT.

LPAs are part of planning our demise, which should be done along side making a will and possible taking steps to minimise IHT. All this should be done as early as possible and you certainly should not be leaving it until your dotage when it may me too late to do any of those things.