Money, residential care costs and LPAs

WattieHudds

So my parents were always very generous with their money towards their four children, of whom I am the eldest (especially my sister who's financial position has not been as comfortable as the rest of us e.g. they would buy and pay for the upkeep of her car, regularly help out with larger bills etc). For me, I have inherited a huge garden from them, (4+ acres of woodland!), which they used to help cover the considerable upkeep costs. My mother has now passed away and my father is completely lost to dementia and in a nursing home.

My question is, having full financial LPA for my father's affairs, am I permitted to continue to use his money on his behalf for these types of expenditures? If he was fully compos mentis I am sure he would have continued to support us to the levels he (and my mother) always did, but obviously he is not now in a position to do so. He still has considerable savings (£100k+), but his monthly income from pensions and investments has a shortfall of £2000 relative to his care home costs, so his funds are slowly diminishing. Given that is the case I am nervous about using my LPA powers to continue to provide the levels of financial support to my sister from my father's money, or to use any of it to help cover the garden upkeep costs as there is no telling how long my father is going to continue to need nursing care (he is 88 now).

Can anyone help clarify where I would stand if I spent money on his behalf for the types of things I have mentioned, and subsequently his savings dwindled to the point where his total funds fell below the £20k minimum for self-funding of nursing home care?

RedFraggle

The obligation is to use his money in his best interests so I think you could be in trouble as to how that would be the case.

MarzipanCrumble

Are you living in their house? Are you 60+?

elsien

have a look through the OPG giftgiving guide.

https://www.gov.uk/government/publications/giving-gifts

My view for what it’s worth is that as his money is slowly diminishing it would be unwise and not in his best interests for you to carry on giving gifts in the same way as previously.

Although this is a pattern he has established in the past, if he had capacity, he may change his priorities if he knew that he would need the money himself for a reasonable level of care so you need to bear that in mind as well.

And this is simply pushing the financial issues down the line - when your Father passes away, how will you maintain the woodland, and how will your sister pay her bills then? From the limited information given and to the external observer it doesn’t seem to be in your father’s best interests to use his money for other people instead of on himself when it’s just delaying family having to make changes and live within their means without support in the future.

Your father’s past gifting behaviour is part of it, but it’s not the whole thing.

I would suggest contacting the OPG if you still are considering gifting at the current level because although some of the helplines are not great, you risk having the LPA removed if you don’t do things correctly.

elsien

It is almost guaranteed to be considered as deliberate deprivation of assets by a local authority at the point of which they take over paying for his care as well, should it come to that.

Albermarle

If there was an urgent need to spend some money on garden maintenance that was really needed ( such a s mending a broken down fence) I would think that would be OK as you are protecting his assets, that might need to be sold one day to pay for care fees.

elsien

I read it that the woodland had already been gifted so is not technically one of father’s assets anymore. Perhaps the OP could clarify.

Keep_pedalling

Where a pattern of gifting has previously been established you can continue to make those gifts but only if this does not impact the ability to continue to fund the expenses of the donor for the foreseeable future. So for instance if the donor has an annual income of £50k, £2M in the bank and annual care costs of £80k continuing reasonable gifts would not impact the donor’s ability to pay but if they only had £20k in income and £100k in the bank then anything other than miner gifts must stop.

Even if the former applied it could land an attorney in trouble if one of the beneficiaries of the donor’s estate was not happy at gifts impacting their potential inheritance.

https://www.mandg.com/adviser/tech-matters/iht-and-estate-planning/gifting/gifting-guidance-attorneys-deputies

WattieHudds

All good advice thanks and largely as I had expected. In essence, whilst £100k seems like a decent amount of cash now, it's dwindling at the rate of c.£24k per year, and I absolutely see the point (which I had missed before) that my father's primary need now is his own care, whereas previously that was obviously not a concern. Also, it is potentially only four years until the £20k limit is reached, so not that long until the Local Authority will be involved with his finances, and by extension will be looking at how I have financially represented him over that time.

Exodi

Does the financial LPA have any instructions? This can be viewed online (click 'View LPA Summary') if it's a newer LPA.

For example, I am an attorney to my stepfather and his states:

If it is in my best interests, my attorneys may make gifts:

(a) On customary occasions to persons (including themselves) who are related or connected with me, or
(b) To any charity to which I have made or might have been expected to make gifts.

provided that the value of such gift is not unreasonable having regard to all the size of my estate.

In this situation, it would be hard to argue that gifting money to yourself for the upkeep of your property while he is in significant negative cashflow is in his best interests. I also suspect we're not talking about £30 here.

If he did exhaust his funds, not only would you cause the regrettable situation of him potentially being turfed out of his current care home and dumped into 'over-my-dead-body-grove' at the behest of the local council, it would look to be a clear-cut case of deprivation of assets, as the care costs were known at the point you were gifting yourself money that could have been used.

It sounds like he's already transferred the majority of his assets (though note he may still be liable for IHT if gifted within 7 years of his death).

If I were the attorney, I would personally suspend any gifting or subsidising of people at this point, outside of birthdays and things like that.

GrubbyGirl_2

I am afraid I actually know someone who was LPA to his mother and spent nearly £50k of her money on gambling. His defense was he had a long term gambling problem and that she always helped him out when he was at his worst so had she been in control of her money she would have helped him out. He ended up with an 8 month suspended prison sentence and ordered to pay the money back.

And the reason why I know him was because I was the person (in my professional capacity) who reported him to the Office of the Public Guardian. My advice is don't do it as it will definitely be considered as deprivation of assets.