LPOA and expenses
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From the OPs posts it seems that Father still has mental capacity to make his own financial decisions. In that situation as an Attorney he should only act with his fathers permission and in accordance with his father’s wishes however sensible or perverse they may be. The attorney has no authority to do anything else. Don’t ask the siblings for permission to do anything , they do not have authority to give it.
Once he looses mental capacity the situation becomes very different. The Attorney can only act in the interests of the donor. There is no authority to do anything else except with the permission of the Court of Protection.0 -
maisie1234 wrote: »3. Is the care home fees classed as coming out of INCOME or CAPITAL? He is funding school fees for the coming year and I understand that he can do that providing it comes out of spare income.
He can do whatever he likes as he still has capacity. When he loses it, it gets more complicated. Does his Lasting Power of Attorney specify that he wants to continue funding the school fees after he has lost capacity? With an expressed wish plus a previous history of making such gifts, it should be possible for the gifts to continue after he has lost capacity.
As KP said there is no inheritance tax benefit unless he survives seven years after making the gift / paying the school fees, as it isn't out of spare income.
He or you should consult an independent financial adviser and discuss Inheritance Tax planning, in particular investments that are free of Inheritance Tax after two years. Was he married; does he have two Nil Rate Bands and Residential Nil Rate Bands available?0 -
Hi All, I am actually a 'she'! Nom is correct. I have already paid the bill for the LPOA and new paperwork. I was querying whether I could pay say £10k in advance of him passing almost as a call off contract.
My Father is on the cusp of capacity. He signed his LPOA's in Jan and he was assessed as capable. His GP also confirmed he has capacity but some short term memory loss. Having said that he isnt great. He always recognises me though. Introduces me properly to everyone at the care home. How does one judge whether he has lost capacity. I am merrily doing what I think is best. I mention things to him but he isnt really interested. Signs things I put in front of him but I have sorted out an awful lot in the last 6 months so I guess he trusts me and I wont betray that trust.
The vast majority of his money is in a two year investment that will be free of IRT should be survive. In his day he was in the financial sector and would have loved all of this but sadly it is now left to me to sort out.
I am trying to get some life insurance for 2 years to cover the IRT bill but he has a few health issues - nothing that bad tbh. He has a heart bypass but nearly 15 years ago. Waiting to hear back on that one.0 -
maisie1234 wrote: »How does one judge whether he has lost capacity.
If they can:- Understand information given to them about a particular decision
- Retain that information long enough to be able to make the decision
- Weigh up the information available to make the decision
- Communicate their decision
At the point there's a question mark over his capacity it would be better to get the LPOA registered (if it isn't already) and sign for him. Rather than putting the papers under his nose, even if he is still happy to sign. It avoids any possibility his instructions could be disputed later on the grounds he didn't know what he was doing.
Have you considered simply cashing in some of his estate when the time comes?I am trying to get some life insurance for 2 years to cover the IRT bill but he has a few health issues - nothing that bad tbh. He has a heart bypass but nearly 15 years ago. Waiting to hear back on that one.
The average person buying whole of life insurance to cover inheritance tax will pay more in premiums than they get out - that's the nature of insurance. Inheritance Tax is by definition something you can usually self-insure (you only pay it if you've got money to pay it). Insurance is useful mainly if your estate is highly illiquid, and there's a material benefit to having the insurance policy pay out so you can settle the bill with HMRC without selling assets in a hurry.0 -
Not in this case. He is looking at circa £400k in IRT!0
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Playing with a few £k when there is £400k IHT bill looming is not going to mitigate much,
should be looking at offloading £100ks.
With the income and over £500k capital there is plenty to cover care.0 -
I am going through the probate process at the moment - Dad was very organised and simplified his finances before his death + I have the time so we are doing it ourselves rather than getting a solicitor involved.
I cant help thinking that with your set up and the house already sold you could easily do the process yourself, perhaps just paying for a meeting or two to check things over. In any case I think paying for probate application is an allowable expense of the estate isn't it?0 -
Yes, because of the mess my Father's finances were in he has left it very very late to sort this out. My role involves finances in some way and customer issues so its not been as bad as I first thought. Throwing money at an issue does sometimes help. There is NO way we could have cleared his house on our own.
There is of course plenty to cover his care costs over the coming years.0 -
maisie1234 wrote: »Not in this case. He is looking at circa £400k in IRT!
You said the vast majority of his money was in a BPR investment free of IHT after two years? Is the two year clock still ticking?
It could in theory make sense in that case to get life cover for the two year clock. (With some BPR investments you can get it built in, but too late now if it's already been purchased.)
However he would have to make that decision himself if he still has capacity. Attorneys cannot buy life insurance because it's not in the interests of the donor.getmore4less wrote: »should be looking at offloading £100ks.
Pointless if the IHT bill will be eliminated when the BPR two-year clock expires, which will happen long before the seven-year clock for the gifts.
If the BPR investments are already free of IHT but he still has another £1 million subject to IHT, it would make more sense to take independent financial advice and look at BPR for that as well, assuming it doesn't compromise his ability to meet his care costs. He is already in a care home and "isn't great" so the 7-year clock for any further gifts to be effective for IHT planning is a prohibitively high bar.0
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