Legacy and benefits

[stewamax]

...anything done under PoA must be in the best interests of the person being acted for.
Note that this might not be the same as what they would have done had they been able to act themselves - eg moving investments into IHT exempt funds might be what someone on a Care Home with Dementia might have wanted, but an IFA wouldn't allow us to invest in such a Fund from MrsF's mum as their Compliance team said it wasn't for the Mother's benefit.

Interesting: "best interests" vs "donor's benefit" vs "decisions that the donor would have made themselves when in sound mental health"

The attorney has to make what a reasonable person would regard as sensible decisions on behalf of the donor, but this sounds like a minefield for interpretation.
For example, a retired tax accountant now presenting with severe Alzheimers might - when in sound mental health - have created a complex disposition of their assets that took account not just of their own interests but also that of their wider family. Is the attorney bound to unpick this in order that the donor can live in a suite in the care home equivalent of the London Clinic?

[Lootman]

I cannot see a way around the Deprivation of Assets issue, no matter what you do.

Yes, this has to be the case.

There is a similar provision in bankruptcy law, whereby if you are an undischarged bankrupt and you get an inheritance or other windfall, then the loan forgiveness goes away and your new-found wealth has to repay your creditors.

But a day after the discharge, it is all yours and the creditors can bathe in their own tears.

[Dod101]

...anything done under PoA must be in the best interests of the person being acted for.
Note that this might not be the same as what they would have done had they been able to act themselves - eg moving investments into IHT exempt funds might be what someone on a Care Home with Dementia might have wanted, but an IFA wouldn't allow us to invest in such a Fund from MrsF's mum as their Compliance team said it wasn't for the Mother's benefit.

Interesting: "best interests" vs "donor's benefit" vs "decisions that the donor would have made themselves when in sound mental health"

The attorney has to make what a reasonable person would regard as sensible decisions on behalf of the donor, but this sounds like a minefield for interpretation.
For example, a retired tax accountant now presenting with severe Alzheimers might - when in sound mental health - have created a complex disposition of their assets that took account not just of their own interests but also that of their wider family. Is the attorney bound to unpick this in order that the donor can live in a suite in the care home equivalent of the London Clinic?

I said I would not comment further and I will not re the particular case, but to comment on the points raised by stewamax, I do not think that the Attorney needs to attempt to replicate what the person whose needs are being looked after might have done, in fact I am sure that is not part of the attorney's duties. His duties are to act in the best interests of the person in the position in which they now find themselves. That is to provide comfort for them and financial security for them for the rest of their lives. if that means rearranging their financial assets to provide the income to provide for this or medical care and so on that would surely be fine.

But to rearrange the assets of the person so as to save on IHT for instance is not particularly in the interests of that person, even although I should imagine it is done from time to time by attorneys. The beneficiary in this case would have been the heirs not the individual, and that is the danger with using Powers of Attorney. OTOH would it actively have been doing the person any harm? It would surely not have prevented access to assets if the person needed that in the future, but might for instance have moved the assets into a higher risk category. An interesting point though because it tends to suggest that that is how officialdom would rule if it came to challenging what had been done.

I remember my late wife needed a boost to her income , very late in her life, and I reshuffled her investments a bit. I was tempted to move them into my name but thought better of it at the time since I was aware that her Will left everything to me anyway, tax free and I did not want to have to justify my actions in doing so.

Were I to comment on the original case, it would be to question whether removing the ' very large sum' left to him by his Aunt and replacing it with his being a beneficiary under a discretionary trust was in the best interests of the individual. Not exactly clear cut, I'd say but I would not know because there are many factors at work in this particular case.

Dod

[Lootman]

Interesting: "best interests" vs "donor's benefit" vs "decisions that the donor would have made themselves when in sound mental health"

The attorney has to make what a reasonable person would regard as sensible decisions on behalf of the donor, but this sounds like a minefield for interpretation. For example, a retired tax accountant now presenting with severe Alzheimers might - when in sound mental health - have created a complex disposition of their assets that took account not just of their own interests but also that of their wider family. Is the attorney bound to unpick this in order that the donor can live in a suite in the care home equivalent of the London Clinic?

But to rearrange the assets of the person so as to save on IHT for instance is not particularly in the interests of that person, even although I should imagine it is done from time to time by attorneys. The beneficiary in this case would have been the heirs not the individual, and that is the danger with using Powers of Attorney.

If it also does no harm to the individual but does save IHT, or removes the need for probate later, then I personally would see no harm in doing that. After all, a Deed of Variation after death would achieve something similar, and if you are both the attorney and the executor, then you have continuous power to act anyway.

My test would be whether or not I am happy to explain my actions at any subsequent time.

I remember my late wife needed a boost to her income , very late in her life, and I reshuffled her investments a bit. I was tempted to move them into my name but thought better of it at the time since I was aware that her Will left everything to me anyway, tax free and I did not want to have to justify my actions in doing so.

Again, I would see no problem with moving the individual's assets to my own name if I am acting as attorney. In fact there is a specific form for getting a state pension redirected to the attorney in such situations. Same with bank accounts and other assets.

If I am the sole beneficiary of that person's Will then again it hardly matters whether I take possession before or after death. And before could avoid the need for probate.

The one catch is what if you do that and then die before the other individual?

[Dod101]

But to rearrange the assets of the person so as to save on IHT for instance is not particularly in the interests of that person, even although I should imagine it is done from time to time by attorneys. The beneficiary in this case would have been the heirs not the individual, and that is the danger with using Powers of Attorney.

If it also does no harm to the individual but does save IHT, or removes the need for probate later, then I personally would see no harm in doing that. After all, a Deed of Variation after death would achieve something similar, and if you are both the attorney and the executor, then you have continuous power to act anyway.

My test would be whether or not I am happy to explain my actions at any subsequent time.

I remember my late wife needed a boost to her income , very late in her life, and I reshuffled her investments a bit. I was tempted to move them into my name but thought better of it at the time since I was aware that her Will left everything to me anyway, tax free and I did not want to have to justify my actions in doing so.

Again, I would see no problem with moving the individual's assets to my own name if I am acting as attorney. In fact there is a specific form for getting a state pension redirected to the attorney in such situations. Same with bank accounts and other assets.

If I am the sole beneficiary of that person's Will then again it hardly matters whether I take possession before or after death. And before could avoid the need for probate.

The one catch is what if you do that and then die before the other individual?

The point re IHT was in responses to Dr Fyffe's point. I did not just make it up.

Getting the State Pension redirected to the Attorney is probably more a matter of convenience than anything else. It still belongs to the individual not the Attorney!

If I had transferred assets in the circumstances that I described I would have got the Crest transfer form and signed it as my wife's Attorney and so they would then belong to me and form part of my estate. Faced with that at the time, I concluded that that did not feel right and so left the assets alone. Certainly the test of whether it was in her best interests would have failed I think.

Dod

[UnclePhilip]

I said I would not comment further and I will not re the particular case......

Were I to comment on the original case, it would be to question whether removing the ' very large sum' left to him by his Aunt and replacing it with his being a beneficiary under a discretionary trust was in the best interests of the individual. Not exactly clear cut, I'd say but I would not know because there are many factors at work in this particular case.

Dod

Well, were you to have so commented (which you wouldn't have, of course, having said you wouldn't....), then I would have responded that, if "the individual" to whom you referred was the man with learning disabilities, then there could hardly be a case so "clear cut".

On the one hand, to lose all legacy means tested benefits, use the inheritance to replace them for a few years, then go on to a lower benefit rate (Universal Credit).

On the other hand, continue receiving all benefits, and receive disbursements from a discretionary trust fund to provide for all those pleasurable things which benefits do not cover. Plus a safety net fund in case his placement comes to an end for whatever reason.

And if "the individual" to whom you refer is the late aunt, it would require an extraordinary set of circumstances to doubt it being in her best interests as (a) she is dead, and (b) were she to listen from heaven she would hear how her beneficiary (who she clearly loved as evidenced by the extraordinary gift) would benefit from the trust....

Hmm, a hard one to decide?

And, out of a wish not to tempt you to further break your declaration not to comment further on "the original case", I will leave it there with regard to your comments on "the original case"....

[genou]

On the one hand, to lose all legacy means tested benefits, use the inheritance to replace them for a few years, then go on to a lower benefit rate (Universal Credit)..

My emphasis. I asked this before, and got no reply. How are you defining a "very large sum" ( and potentially its usage ) in a context where you are also saying that it will be spent in a few years?

[UnclePhilip]

On the one hand, to lose all legacy means tested benefits, use the inheritance to replace them for a few years, then go on to a lower benefit rate (Universal Credit)..

My emphasis. I asked this before, and got no reply. How are you defining a "very large sum" ( and potentially its usage ) in a context where you are also saying that it will be spent in a few years?

Sorry, must have missed that.

On a public board, even anonymous, I prefer not to be too specific. However, the total personal benefits (care and housing benefit) come, for vulnerable adults in the area I live, to about £24,000 a year. So, after say 4 years you've eaten up £100,000....

[UnclePhilip]

Well in this situation she's effectively donated it to the Local Authority.

... this recipient will use it to maintain their standard, possible with a slight temporary improvement until it is gone, whereupon they will once again need the assistance of the State.

Wheras if the Will had been written with more knowledge of the impact of the inheritance, the person could have benefitted from it as a supplement to their entitlements, perhaps for the rest of their life.

Paul

I'm lost. He has inherited "a very large sum" . I can grasp that he may squander it, but not that there will be "a slight temporary improvement until it is gone" . Is he legally fully capable, i.e no guardian ?

His public benefits are only entitlements whilst he has no funds. I'm thinking the problem is that he is being treated as fully capable when you think that he should not be, and then the funds could see him out if properly managed.

Just scrolled to see what I'd missed. Hopefully you can now see how there will be "a slight temporary improvement until it is gone"?

And, by definition, you don't get ESA if deemed "capable" (and, to add, he's in the Support Group). Guardianship in these situations doesn't affect benefit levels, it affects how the money is administered.

Anyway, this strays from my enquiry; I share it to help readers understand.

[genou]

So, after say 4 years you've eaten up £100,000....

And, by definition, you don't get ESA if deemed "capable" (and, to add, he's in the Support Group). Guardianship in these situations doesn't affect benefit levels, it affects how the money is administered.

Anyway, this strays from my enquiry; I share it to help readers understand.

My thanks for your reply, and I do understand more. I had started from the perception that the inheritance would free the man from dependence on public finances, based on my reaction to "very large sum". I see from your reply it is likely a poisoned chalice, given rules of which I know nothing regarding "grandfathered" rights, and the introduction of UC.