Power of Attorney - Adult child with POA for one half of a married couple

Sea_Shell

Prompted by another thread, I have been wondering about this...

If your parents (or step parents) make a financial POA and name you, their adult child(ren) as their attorney, I understand that this means dealing with their finances in their best interest.   

However, would they have had to make specific notations in the POA forms, if they wanted you to carry on keeping their spouse, in the manner in which they had been, before they lost capacity?

i.e. paying towards household bills, maintenance or enabling them to still have a holiday etc etc. if they themselves have had to go into care, so are no longer living in the house.

Especially if the donor holds most of the "marital assets" in their name.

I've just checked the POA that my in-laws have registered, and it gives no written instructions, to that effect.   They have not named each other first, as they are both over 80.

So if the time comes, will my DH and his sister have their hands tied, if their Dad loses capacity, but Mum didn't have much in her own name.   

Should we advise that they try and equal out their cash.    Tricky when FILs pension provides the majority of the household income.    He holds most of their investments too.

Does the LAW effectively force you to throw the other parent (or step-parent) under a financial bus?!?

elsien

I think you may have two slightly different issues here. Because part of power-of-attorney is acting in someone’s best interests, part of which is their behaviour and choices before they lost capacity. Someone has asked that question here and it might be worth signing up for the free trial to see what the answer is.
https://uk.practicallaw.thomsonreuters.com/a-127-5113?transitionType=Default&contextData=(sc.Default)&firstPage=true
If they are a self funder and have enough assets it’s possible less likely to be an issue.

The second issue though is local authority financial assessments, if the person needs help towards paying for their care fees. That is separate to the power of attorney with different guidance and rules and I think in those circumstance that says he would struggle to justify paying for holidays while leaving himself short and needing local authority help.

Sea_Shell

Just had another random thought on POAs

If you have* to deal with messy finances under a POA**, (which may include debt)  would this make you financially linked to that person and effect your own personal finances and credit worthiness, or is everything kept completely separate?  

I understand that legally you are wearing 2 distinct hats, but would the bank's algorithms pick up on that?




*Obviously you don't HAVE to, you could renounce your attorneyship...I think?

** Different family, likely Court of Protection, as no POA made as yet.

elsien

No, it’s separate because finances still remain in the name of the person who lacks capacity so no financial link. 

SVaz

When it comes to financial assessments for care,   the person who is subsidising the other ( usually the Man with the bigger pension etc.)  the LA would recognise that need and only take 50% of their private/ company pension / investments into account -  that’s how I understand it anyway. 

I will have a larger income than my Wife -  bigger Sipp plus a military pension so if I needed care,   Iirc,  my SP would all be taken into account but only half of the rest and half of our savings, no matter whose name they are in. 

If they are self funding for care,  I doubt anyone would care either way.
Just keep meticulous records in case the money runs out.   

SVaz

According to Age UK,  my comments above are correct.    

Apparently,  having separate bank / savings accounts for each of them is beneficial.
That way you could direct half of investment income etc.  into MiL’s account,   of course that requires more admin - self assessment for each of them.   Might be easier to liquidate the investments and split into individual savings accounts.   Selling would mean liability for CGT though, I think.  

Keep_pedalling

Why has only one of them put a LPA in place? Even if one of them has few assets of their own it still needs managing and at some point they may end up owning all if the husband dies first.

Sea_Shell

Keep_pedalling said:

Why has only one of them put a LPA in place? Even if one of them has few assets of their own it still needs managing and at some point they may end up owning all if the husband dies first.

Its not one of a couple, its the two sides of the family.  DHs and mine.   

Mine bury their head in the sand over all things financial. (i've tried, and given up)
DHs have all their ducks in a row and both have POA and wills, but unequal finances.

Keep_pedalling

It would probably be a good idea to even out those finances. As it stands, if he needed residential care the bulk of their savings would be within the financial assesnent. 

Malthusian

Sea_Shell said:

Prompted by another thread, I have been wondering about this...

If your parents (or step parents) make a financial POA and name you, their adult child(ren) as their attorney, I understand that this means dealing with their finances in their best interest.   

However, would they have had to make specific notations in the POA forms, if they wanted you to carry on keeping their spouse, in the manner in which they had been, before they lost capacity?

If the incapacitated parent has enough money to fund their care for the foreseeable future and continue maintaining their spouse, it should not be necessary to specify that in the LPOA, although it wouldn't hurt. Because:

1) It would not conflict with the overriding duty to act in the donor's interests (as their care fees are still being paid)
2) It would meet the attorneys' duty to use the donor's money as the donor themselves would have if they still had capacity
3) Spouses have a legal duty to maintain each other (as I think we discussed in the earlier thread you mention)

If there is a realistic possibility of exhausting the donor's funds by the combination of care fees and maintaining their spouse, it gets tricky. I think even if there was a specific instruction in the LPOA to continue maintaining the spouse, the Attorneys should ask the Court of Protection for direction (continuing the maintenance in the meantime).

In that previous thread that seems to be what happened; the court eventually directed the Attorneys (the donor's spouse and his stepchildren, who were in dispute) to pay the spouse a monthly amount.

Life would probably be a lot simpler if the Attorneys bought an Immediate Needs Annuity for the donor, which would have a high chance of losing money to the insurer, but would remove much of the conflict between the need to maintain the spouse and the need to keep enough money back to fund the donor's care. The donor's needs would be more or less guaranteed to be met by the insurer, and if the spouse spent all the rest it wouldn't put the donor's care at risk. Any arguments between the spouse and the children over the inheritance would not immediately affect the donor.

Sea_Shell

Thanks, makes sense.

I assume this bit applies to marital finances in general, not just under PoA?...

"Spouses have a legal duty to maintain each other"

I didn't know that.  I wonder if those who operate a "my money, your money" household budget system realise this?!? 😉

How does that square with a spouse not being responsible for the others debts, if their debt repayments leave them unable to "support themselves" and pay their share of household expenses.