My mother is self funding in a CH. For years she has been giving my son a monthly allowance even though he is now in his mid 20s and working. Its something she has done for about 10 years, and until fairly recently she was still aware of. I have POA and just need to know if it is ok for this to continue. I know it is what my mother would want and my partner feels that the only person who could stop this would be my son, at his own request, not me. None of us have any problems with this continuing but, like lots of others, I have an 'invisible' lurking in the shadows, asking lots of questions re finances etc sensing there may be money coming their way in due course. This sibling would make things as difficult as possible if I don't toe the line legally, and is itching for info about my mother's investments and so on. I can see that they will kick up a stink about this when probate is done even though they themselves have had many thousands of pounds in the past. Can anyone help me with the question of whether this allowance should be stopped or not? It will not affect my mother's ability to self fund and is £60 per month. We have stopped buying birthday presents and xmas presents for the adults out of my mother's money as none of us need them and it seems pointless as my mother would not now remember if she 'gave' a birthday present to one of her children.
question re gifts continuing once POA is registered
- Thread starter Aquamanda
- Start date
If it has been custom and practice for some time and it does not effect your mother's standard of living I don't think the OPG would object, ask them http://www.justice.gov.uk/contacts/opg
If the time comes when LA funding is required the LA may take a different stance.
If the time comes when LA funding is required the LA may take a different stance.
Thanks so much Nitram. You can imagine how much I have been worrying about this as my sibling will do anything to cause a problem for me and at the end of the day, my son does not really need this allowance, I just would like it to continue as it won't affect my mother's funding for care and I know how much my mother dotes on my son. I don't think we will get to the stage where the LA had to take over funding but I guess if we did and there was a problem, I would be more than happy to repay the money if necessary. I just don't want to stop it for the reason of my sibling being difficult as that would wind me up even more!!!!
I will definitely contact the OPG.
I will definitely contact the OPG.
I have been looking into this and this is my understanding. Hopefully others may put me right.
I think the donor can giveaway up to £3000 per year in total plus as many gifts for weddings and birthdays of £250 as they like. The £3000 can be a lump sum or a monthly sum that does not exceed £3000 per year and as long as it is paid out of income i.e. their current account and does not affect their ability to self fund.
These are really inheritance tax rules. You should keep careful records as you will have to declare all gifts at probate, even if they are less than £3000, and then on the form you can deduct the £3000 allowance. This is to show that you have received gifts but they are less than £3000. The probate office can call for bank statements and records if it feels the need.
I am going through probate at the moment for my mother who has recently died but it was not dementia related. I have problems as she had large savings but was receiving pension credits and free carers from the Council. I do not believe she ever applied for these and somehow social services arranged it all, nevertheless l think I owe about £100,000 for benefits she was not entitled to. Trying to go through her finances is a nightmare but I think it will be quicker. I had a friend where the DWP got involved in probate and decided to investigate, some two years later the investigation is still on-going. Hence the need for careful record keeping and documents.
I think the donor can giveaway up to £3000 per year in total plus as many gifts for weddings and birthdays of £250 as they like. The £3000 can be a lump sum or a monthly sum that does not exceed £3000 per year and as long as it is paid out of income i.e. their current account and does not affect their ability to self fund.
These are really inheritance tax rules. You should keep careful records as you will have to declare all gifts at probate, even if they are less than £3000, and then on the form you can deduct the £3000 allowance. This is to show that you have received gifts but they are less than £3000. The probate office can call for bank statements and records if it feels the need.
I am going through probate at the moment for my mother who has recently died but it was not dementia related. I have problems as she had large savings but was receiving pension credits and free carers from the Council. I do not believe she ever applied for these and somehow social services arranged it all, nevertheless l think I owe about £100,000 for benefits she was not entitled to. Trying to go through her finances is a nightmare but I think it will be quicker. I had a friend where the DWP got involved in probate and decided to investigate, some two years later the investigation is still on-going. Hence the need for careful record keeping and documents.
Thanks Nick and totally sympathise with your position and do hope the situation you are trying to sort out gets resolved.
There won't be a tax issue as the allowance is the only gift money that comes out of my mother's money. I only let it continue as its now been in effect for nearly 10 years, 90% of which time my mother was fully aware that this allowance was continuing.
So the total p.a. is only about £720 and no other gifts are made from her account now.
My only concern is that maybe I should have stopped this allowance under the POA but am not sure on what grounds I should stop it as it's just something my mother set up and was happy with even after my son started working, but I am worried that her now lacking capacity changes things.
There won't be a tax issue as the allowance is the only gift money that comes out of my mother's money. I only let it continue as its now been in effect for nearly 10 years, 90% of which time my mother was fully aware that this allowance was continuing.
So the total p.a. is only about £720 and no other gifts are made from her account now.
My only concern is that maybe I should have stopped this allowance under the POA but am not sure on what grounds I should stop it as it's just something my mother set up and was happy with even after my son started working, but I am worried that her now lacking capacity changes things.
As you have said, this is for Inheritance tax purposes and has nothing to do with what gifting one is allowed to do under LPA.
With an LPA or Deputyship, it has to be in line with what has been gifted in the past pre-LPA.
That seems to accomodate your gifts Aquamanda.
To reassure you further, I've a Deputyship for my mum and I know that she always intended to help my sons through university. She was very keen on higher education and this was her way of making sure there would never be any financial obstacles to their going. I emailed the OPG to ask if this would still be okay to do, given that there hadn't been a precedent as they hadn't started university before she got really ill, and I was told to go ahead and gift the money on her behalf. The sums are quite large and I've two boys, but she is wealthy enough to afford this and will always be self-funding. I think if the reason is sound, the amounts proportionate to the estate, and there won't ever be questions from the revenue or local authority, then you're in the clear. Obviously that doesn't address the issue of unhappy relatives but they have no moral right to object to something your mum has always done and would've continued to do herself had she not become ill.
The invisible sibling returns and takes an interest in the finances. I think it must be such a well trodden old story, I have the same one sadly.
I thoroughly recommend the OPG they are very reasonable and have so much information plus they've seen it all before.
"...The £3000 can be a lump sum or a monthly sum that does not exceed £3000 per year and as long as it is paid out of income i.e. their current account and does not affect their ability to self fund...."
The £3000 limit applies to all not otherwise exempt occasional gifts whether from income or capital.
However there is no limit on regular gifts funded from 'surplus' income.
Exempt gifts
Some gifts made during your lifetime are exempt from Inheritance Tax because of the type of gift or the reason for making it.....
....Regular gifts or payments that are part of your normal expenditure
Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.
These include:
monthly or other regular payments to someone
regular gifts for Christmas and birthdays, or wedding/civil partnership anniversaries
regular premiums on a life insurance policy - for you or someone else...
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
The £3000 limit applies to all not otherwise exempt occasional gifts whether from income or capital.
However there is no limit on regular gifts funded from 'surplus' income.
Exempt gifts
Some gifts made during your lifetime are exempt from Inheritance Tax because of the type of gift or the reason for making it.....
....Regular gifts or payments that are part of your normal expenditure
Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.
These include:
monthly or other regular payments to someone
regular gifts for Christmas and birthdays, or wedding/civil partnership anniversaries
regular premiums on a life insurance policy - for you or someone else...
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
Forgive me if I'm wrong but I thought having POA meant that I am mums representative. I am to be treated as if I am mum by banks etc, and it was me that was responsible for mums money, to spend as she would wish, and it is nobody else's business, including my sister.
Edited to say Apart from the accounts I keep if ever I am asked to explain payments etc to the opg
Edited to say Apart from the accounts I keep if ever I am asked to explain payments etc to the opg
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"Forgive me if I'm wrong but I thought having POA meant that I am mums representative. I am to be treated as if I am mum by banks etc, and it was me that was responsible for mums money, to spend as she would wish, and it is nobody else's business, including my sister."
Assuming that the bank have had sight of the power and that your sister is not also an attorney your thoughts are correct.
Anybody, including your sister, can complain to the OPG if they have concerns about your management of your mum's financial affairs.
Assuming that the bank have had sight of the power and that your sister is not also an attorney your thoughts are correct.
Anybody, including your sister, can complain to the OPG if they have concerns about your management of your mum's financial affairs.
So long as you stay within the OPG's guidelines then yes you are right. I was told it was none of my sister's business, though easier said that done!!
There are safeguards in place, so I think it was Jennifer the moderator, who put a really extreme example on one thread, sorry can't remember 100 percent, but the relatives argued that their mother would want them to have hundreds of thousands in designer bags, cars and holidays, while they wouldn't buy her the clothes she wanted to wear.
They couldn't get away with that and will be in serious trouble when it came to the attention of the authorities but my understanding, and stress I am no expert that if the expenditure doesn't deprive mum and you can justify it to a reasonable person, then you'll be fine. So if mum always gave grandkids £100 for Christmas and you continue with that, it's reasonable. To gift a Lamborghini wouldn't be.
I am not an expert and I refer all of my queries to the OPG.
I refer all too - just incase I'm "reported"
I'm actually meaner than mum.... No more than £20 for Christmas and birthdays. She never was very generous before D, but got a bit over generous after D.
have also made it clear, that no "loans" will be lent out to family members, as I've taken advice and the advice was not to, in my circumstances. This keeps the books nice and easy to control for me.
If a baby is born, I have given the baby £100 as that is what mum always did before D
I have sent an email to the OPG to get them to officially clarify the position but am so grateful for all the replies. It would be easier to be an only child sometimes. I know my sibling will create hell over this and all the money they have scammed over the years will somehow be brushed under the carpet. Why can't people just be civilised and supportive in these difficult times. At least the forum is!!!!!
There are a number of issues here not just from an OPG point of view but their guidance can often be at odds with LA regulations which can be another kettle of fish. I know you say your mum from a funding point of view will always be self funding but the next person reading this thread might take the rules as applying equally to them, when they will not.
With regards to your son, is there evidence that such payments were made regularly by your mum prior to you becoming LPA. Check the bank statements to see. If your sibling was to report you and someone investigated then it wouldn't be sufficient for you to argue that this was paid in cash and only known about verbally. In the grander scheme of things £60 per month wouldn't appear to matter in this case but it highlights the dangers of verbal agreements that have no supporting evidence. Just because a mother says that you are precious and should live in a castle doesn't mean you can go buy yourself one when you take control of finances! So evidence and intent are often called for. Does your sibling have children? Is there a reason runny wasn't so generous to their kids? The best way to protect yourself as you would be surprised how many people get reported on for trivialities, is to send an annual statement of intent to the OPG detailing the gifts you intend to distribute during the following year on your mum's behalf. Include one off gifts such as a wedding gift or special birthday gift as well as regular gifts. The OPG can then agree this and give you the authority/protection you want.
Just to close the circle for those that might be involved with a LA now or in the future, whilst the OPG might give consent within their rules for gifts to be made, the LA might take a rather dim view if such expenditure breaches their rules, especially if it turns out that LA funding for care becomes necessary at some point in the future. Don't forget that in some cases people with dementia can be in a care home for some 10 or 15 years. Today's self funder can indeed become tomorrow's LA funded placement. Despite what people think, there is no time limit that the LA is restricted to in retrospectively checking someone's finances. The 7 years many quote does not apply to the LA who, now that money is short, are investigating and pursuing people for smaller and smaller amounts of money.
As to invisibles, only they know what their motivations are for staying away but some DO have genuine reasons for doing so. It is not always the case that they don't care. With regards to what is often interpreted as greed or self serving financial interests, you just need to look on here to see that they might be justified in their concerns either for their relative's best interests or their own inheritance. This forum alone is awash with tales of theft and misappropriation of funds that would make your hair curl. So perhaps they feel justified in taking a healthy interest. Before everyone jumps on me, I am not saying there aren't criticisms that aren't justified but the bad press that some get on here is only ever one side of what might be a harrowing story and the other side is never heard on here. Yes, be careful of their motivations and protect yourselves in matters to do with money. That, in my view, is about as much energy as you should spend and leave them to their own reasoning/justifications.
Fiona
With regards to your son, is there evidence that such payments were made regularly by your mum prior to you becoming LPA. Check the bank statements to see. If your sibling was to report you and someone investigated then it wouldn't be sufficient for you to argue that this was paid in cash and only known about verbally. In the grander scheme of things £60 per month wouldn't appear to matter in this case but it highlights the dangers of verbal agreements that have no supporting evidence. Just because a mother says that you are precious and should live in a castle doesn't mean you can go buy yourself one when you take control of finances! So evidence and intent are often called for. Does your sibling have children? Is there a reason runny wasn't so generous to their kids? The best way to protect yourself as you would be surprised how many people get reported on for trivialities, is to send an annual statement of intent to the OPG detailing the gifts you intend to distribute during the following year on your mum's behalf. Include one off gifts such as a wedding gift or special birthday gift as well as regular gifts. The OPG can then agree this and give you the authority/protection you want.
Just to close the circle for those that might be involved with a LA now or in the future, whilst the OPG might give consent within their rules for gifts to be made, the LA might take a rather dim view if such expenditure breaches their rules, especially if it turns out that LA funding for care becomes necessary at some point in the future. Don't forget that in some cases people with dementia can be in a care home for some 10 or 15 years. Today's self funder can indeed become tomorrow's LA funded placement. Despite what people think, there is no time limit that the LA is restricted to in retrospectively checking someone's finances. The 7 years many quote does not apply to the LA who, now that money is short, are investigating and pursuing people for smaller and smaller amounts of money.
As to invisibles, only they know what their motivations are for staying away but some DO have genuine reasons for doing so. It is not always the case that they don't care. With regards to what is often interpreted as greed or self serving financial interests, you just need to look on here to see that they might be justified in their concerns either for their relative's best interests or their own inheritance. This forum alone is awash with tales of theft and misappropriation of funds that would make your hair curl. So perhaps they feel justified in taking a healthy interest. Before everyone jumps on me, I am not saying there aren't criticisms that aren't justified but the bad press that some get on here is only ever one side of what might be a harrowing story and the other side is never heard on here. Yes, be careful of their motivations and protect yourselves in matters to do with money. That, in my view, is about as much energy as you should spend and leave them to their own reasoning/justifications.
Fiona
Thanks Fiona, you make some great points and raise some interesting questions. In my case, my son is the only grandchild and the allowance has always been paid into his account by direct debit. I am not sure how far our records go back but am sure the bank could provide the proof if necessary. Do take the point that there is no guarantee that my mother will always be self funding but given her age and health and the money she has left, I believe that will be the case. I guess the worst case scenario would be that I would repay the allowance if the LA ever got involved but I guess that would be only from the time she went into a CH? I guess I am being somewhat bloody minded about this because of the way my sibling has behaved in the past towards my parents and the amount of money that was weaselled out of them so I regard this allowance as slightly balancing the picture although it will come nowhere near to the amount they have managed to get in a very underhand way which caused its own problems as you can imagine.
In reply to FifiMo and the fact that the LA can check beyond seven years I can say that I have asked the bank for all my late mothers bank statements. They only keep records for 6 years, so it may be very difficult for the LA to check beyond that.
Thank you nitram for explaining about regular gifts being exempt from any inheritance tax. This is very helpful as we have received a very large monthly gift for the last three years and I was worried it would have to be added back into the estate. It seems a loophole in the regulations if someone has a lot of money, its an easy way to avoid the tax. For example you could give away £5000 a month for two years and it would be a regular sum. So, you could give away £120,000 this way?
Thank you nitram for explaining about regular gifts being exempt from any inheritance tax. This is very helpful as we have received a very large monthly gift for the last three years and I was worried it would have to be added back into the estate. It seems a loophole in the regulations if someone has a lot of money, its an easy way to avoid the tax. For example you could give away £5000 a month for two years and it would be a regular sum. So, you could give away £120,000 this way?
I think that might prohibit this - unless you have a very large income. According to this post of Nitram's it doesn't include capital.