"Surplus Income" Q

Linton

Sea_Shell said:

Surely if the donor still has capacity to agree to any gifting, just the act of using the poa to facilitate acting on their wishes is not against the rules?

Acting with the permission of a mentally competent donor is fine. But if there is any doubt at all  as to their capabilities I don’t believe it would be right to make the gift.

Sea_Shell

Linton said:

Sea_Shell said:

Surely if the donor still has capacity to agree to any gifting, just the act of using the poa to facilitate acting on their wishes is not against the rules?

Acting with the permission of a mentally competent donor is fine. But if there is any doubt at all  as to their capabilities I don’t believe it would be right to make the gift.

What "proof" would be prudent to obtain if acting with the donors permission?    Record the conversation, have them sign something?   To avoid any doubt if looked at in hindsight.

Eg no question of them not being competent now (at the time of the gift) but they then deteriorated in the years ahead.   How would you cover yourself that what you did back then was okay?

Jeremy535897

In the good old days, the recommendation was to have a doctor present as a witness to competence, but I doubt that will be practical any more.

Linton

tbh if father is mentally competent  I would feel uncomfortable raising the question of minimising IHT at all.  If father mentions it first, fine, one could have a sensible discussion.  Otherwise it seems a little crass.  Just accept one's parent's money is theirs for them to do with as they see fit.

Albermarle

Grumpy_chap said:

Skwizz said:

I also don't think the cost of advice for the size of their estate would be welcomed by them at this late stage, although everyone else might consider it to be the best course of action.
40% IHT on what hasn't already been protected might be financially preferable to a 3-5% fee on the whole estate as it stands.

When I discuss things like this with my Father I can condense it into suitable chunks that he can cope with and give it to him at a time when I think is best for him to receive it.
A professional would not be able to do that and certainly not consider my Father's interests in the same way anyone in his family might.

The cost of professional advice should be far lower than the value it gains.  
The fees you reference seem excessively high - are they fees for a Financial Advisor?  That is not the service you require in this situation.
You should be able to engage the appropriate professional service on a time-based fee, not a proportion of estate fee.

I also disagree with the way you have dismissed the abilities of the appropriate professional. 
You need to find a support that is experienced in dealing with people of your parent's age and their preferences. 
Having an appropriate professional involved can also allay any concerns that your parents (or external individuals) might have about you doing what is in your interests rather than your parents.  It is real concerns and perceived concerns in this regard.

When my father was in a similar position, we learned a lot initially from a charity that was running a free seminar.  There may be something similar in your area.  From that seminar, the charity were able to link to other organisations that were appropriate and experienced in the necessary support for people of your parents age.  Some of these charities are associated with various medical conditions, but the information they can share is relevant whether or not the medical condition applies.
For reference, the local charity that we contacted are https://pathwaysthroughdementia.org/ - you may be able to locate something similar in your area.

As you mention charities, it may be worth reminding the OP that if his parents donated 10% or more to charity in their will, then any IHT levied on the remaining assets would be reduced to 36%. In this way it can be possible to leave a significant charitable donation at a low cost.

OP - There is growing talk in the media that Rishi will do away with the 'hated death tax' ( as the Express, Mail and Telegraph like to call it). Personally I think it is unlikely as it brings in too many Billions, but some increase in the limits and some simplification of the rules, is a  possibility in the next year or two.

Sea_Shell

Linton said:

tbh if father is mentally competent  I would feel uncomfortable raising the question of minimising IHT at all.  If father mentions it first, fine, one could have a sensible discussion.  Otherwise it seems a little crass.  Just accept one's parent's money is theirs for them to do with as they see fit.

I think that depends how open a relationship family have always had with regards money.

If money has always been freely discussed, then bringing up the topic of IHT (or other taxes that can be avoided 😉) doesn't seem crass.

We all know our families best.

Maybe I need to remind mine that the £3000 gifting "limit", isn't. 😁😉

(Not that they've passed me a bean)

lindabea

Sea_Shell said:

Surely if the donor still has capacity to agree to any gifting, just the act of using the poa to facilitate acting on their wishes is not against the rules?

If the donor still has mental capacity to make rational decisions, then the POA should not be formally registered.  This will avoid any questions about who is actually making decisions.  As always, it is good practice for the donor to make a written declaration of any gifts made.   

Sea_Shell

lindabea said:

Sea_Shell said:

Surely if the donor still has capacity to agree to any gifting, just the act of using the poa to facilitate acting on their wishes is not against the rules?

If the donor still has mental capacity to make rational decisions, then the POA should not be formally registered.  This will avoid any questions about who is actually making decisions.  As always, it is good practice for the donor to make a written declaration of any gifts made.   

But I thought to enable you to act on the instructions of the Donor (and have all the necessary access to their banking etc) that the POA had to be formally registered.

You shouldn't just 'pretend' to be them, using their log-ins etc (assuming they are actually on-line)

Albermarle

Sea_Shell said:

lindabea said:

Sea_Shell said:

Surely if the donor still has capacity to agree to any gifting, just the act of using the poa to facilitate acting on their wishes is not against the rules?

If the donor still has mental capacity to make rational decisions, then the POA should not be formally registered.  This will avoid any questions about who is actually making decisions.  As always, it is good practice for the donor to make a written declaration of any gifts made.   

But I thought to enable you to act on the instructions of the Donor (and have all the necessary access to their banking etc) that the POA had to be formally registered.

You shouldn't just 'pretend' to be them, using their log-ins etc (assuming they are actually on-line)

You are right that the POA has to be formally registered with the Office of the Public Guardian, with all the correct signatures, reference number etc , but does not have to be actually used/activated until needed. 

CKhalvashi

Sea_Shell said:

Linton said:

Sea_Shell said:

Surely if the donor still has capacity to agree to any gifting, just the act of using the poa to facilitate acting on their wishes is not against the rules?

Acting with the permission of a mentally competent donor is fine. But if there is any doubt at all  as to their capabilities I don’t believe it would be right to make the gift.

What "proof" would be prudent to obtain if acting with the donors permission?    Record the conversation, have them sign something?   To avoid any doubt if looked at in hindsight.

Eg no question of them not being competent now (at the time of the gift) but they then deteriorated in the years ahead.   How would you cover yourself that what you did back then was okay?

Ideally show that they have received advice from those qualified (and insured) to give it, independently of OP would be proof I'd expect to have if structuring in this nature. If you're comfortable with the tax situation, full tax advice shouldn't be necessary, but someone independent really should speak to them first and advise them of the risks.

It shouldn't cost £thousands, in fact it shouldn't cost more than an hour of consultancy plus whatever it costs for a solicitor to write a letter (the last time I had a contract checked and amended last year it cost about £250+VAT and was charged at an hour).