Serious advice needed re Finance and Court of Protection

Discussion in 'Legal and financial issues' started by Max68, Jul 12, 2019.

  1. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    #1 Max68, Jul 12, 2019
    Last edited: Jul 12, 2019
    Hi All,

    Have been dealing as Power of Attorney along side my sister since mum was decreed to lack capacity and was moved into a care home as per my thread on another forum. However it is all turning into a bit of a financial nightmare and don't know where to turn without being charged to the hilt by solicitors!

    My mother is extremely comfortable financially and pays for her care with her income. Within that income mum has since 2011 and after advice from her financial advisors due to inheritance planning given my sister and I a sizeable amount of money every three months throughout the year, which is somewhat fortunate considering I couldn't work for two years due to illness and I was made redundant not long ago.. Even since she went into care the financial advisor at a meeting we had with him told us to continue with these payments because they are long term and mum wanted to do this continuously and even with these payments she can pay her care fees without a shortfall in her income due to two pensions and two sizeable investments.

    After forwarding Power of Attorney to all of mums utilities and investments I received an email back from an investment firm suggesting that was very little we can do with power of attorney and as mum lacks capacity we would have to remove her as a trustee and the only way we can do that is via a deed from a solicitor through The Court of Protection. I said that we don't want to make any changes because mum is the beneficiary and she is benefitting from her investments so IMO nothing needs to change but the solicitor in a nutshell is saying that to save problems at a later date (I assume she means when mum eventually passes) this needs to be done.

    In the phone call I had with the solicitor I also asked her if it was possible for me to take out a correctly written up loan from mum's finances because at my latest car service I was told I need brakes, a clutch and tyres!! Gulp!! Mum would always help out with things like this but she now lacks capacity and even though my sister was happy with my idea and the fact that any "gifting" is for the donors benefit (me having a car is obviously helpful so I can visit mum and take care of her affairs) the solicitor said I couldn't do this but could gift £3000 half to me, and half to my sister as part of the annual gifting laws. Being a tad worried and uncomfortable at this point I then double checked what the financial advisor had said about the payments mum makes to us every three months. The solicitor basically said the FA had got it wrong and whilst she felt the court would agree to the payments continuing due to being long term since 2011 she said we would have to go through the Court of Protection to verify it legally.

    Today I received a quote for what the solicitors would charge, this is what I received -

    "Following on from xxx e-mail below, xxx has asked me to explain to you the costs implications of a Court of Protection application to seek authority to make gifts on your mother’s behalf.

    As you will be aware, we charge on a time costing basis, but we usually find that our fees relating to a straightforward application are in the region of £3500 + VAT, assuming no hearing is required. There is also an application fee payable to the Court of £385. We would usually seek authority in the application for our costs to be agreed by you as Attorneys, but if agreement could not be reached, then our costs would be assessed by the Court. We therefore charge for our time using the Court of Protection’s prescribed charge out rates, which are less than our private rates.

    The process is that we would prepare the necessary forms for your signature, as Attorneys, and these would then be submitted to the Court with the application fee. The Court would then issue the application (usually within a couple of weeks) and then notices of the application would need to be sent by post to at least three appropriate people (not including yourselves) and your mother would need to be personally served (even if she doesn’t have much understanding). This is to give her the opportunity to object to the application, if she had sufficient capacity to do so.

    Once all relevant parties had been served, the Court would then consider the application and either make an Order, or seek further information/give further Directions in a Directions Order. The process usually takes approximately 3-6 months, depending upon the backlog at the Court.

    I should have all the information I will need to enable me to complete the relevant forms from Caroline’s file, but if there is any outstanding information I require, I will seek this from you.

    look forward to hearing from you, should you wish to proceed."

    So on the one hand we are not allowed to continue the payments that mum wanted to continue but it's fine for me to write a cheque for 4 grand out of mums money to the solicitor and COP!!! And this quote doesn't even include the estimate for the COP Application to remove mum as a trustee from her investments and we have no idea if this really is necessary!!?!?!?!?

    Without going to another solicitor who will probably charge to quote a quote I am stumped at what I should do and would really appreciate some advice. Poor mum would be absolutely mortified.
     
  2. Louise7

    Louise7 Registered User

    Mar 25, 2016
    1,065
    A Trust is a specialist area which you will need expert legal advice about. From what you have said it seems your Mum has recently lost capacity and this has changed the position. Previously she was able to gift money to you herself but the situation is not as straight forward when attorneys want to gift money to themselves. You can however contact the Court of Protection directly for advice, so if you give them a call they will be able to let you know what their general procedures are with regards court applications to remove trustees and authorise gifting. This factsheet may also be useful: https://www.gov.uk/government/publications/public-guardian-practice-note-gifts/public-guardian-practice-note-pn7-giving-gifts-web-version

    Email: courtofprotectionenquiries@justice.gov.uk

    Enquiries: 0300 456 4600
     
  3. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,021
    Female
    Chester
    There are a couple of points you raise which I can comment on:

    Trustee on investments - these are quite common for certain types of investment - once a trustee loses capacity they can no longer operate as a trustee in law - so this is correct and necessary in law, it doesn't prevent your mum being the beneficiary of the assets. I am no expert in this area but I don't think a POA can take over a trustees duties - but might be able to be appointed a trustee, I suggest you phone the co to see what is required and suspect it is just a legal formality which has to be done by deed. If the FA advised on the investment perhaps he can help.

    The £3,000 limit the solicitor mentions is the annual gifting limit out of capital (not income) which is free of IHT, I don't think the solicitor is correct on the way he has suggested you operate this as your mother is gifting out of income, which does not come into IHT gifts limits.

    As to your mum's annual gifting, I don't know what the rules are under POA and suggest you contact the COP as suggested above, wording it as to what is allowed.

    The solicitors fees don't seem unreasonable for the work involved, but you could get a quote from another firm or 2 as well, and see if they confirm the position.

    You might want to speak to an accountant as they are familiar with IHT rules, but solicitors will know gift rules with loss of capacity, so I think you need your FA, solicitor and accountant to work together on this one. If your mum is in the fortunate position to be considering IHT planning, then I think that the fees are worth paying.

    You are clearly dealing with complex affairs here and need good quality professional advice.
     
  4. Normaleila

    Normaleila Registered User

    Jun 4, 2016
    652
    Hi
    I can't advise on the trusteeship but you do need advice on that.

    The gifting of £3k per annum is to do with IHT, not LPA. You could ask the OPG for advice on this - but I'm not sure it will be allowed. A loan for a car will need a decision from the COP.

    It is very expensive to use a solicitor - when I needed a decision (to allow me to appoint a discretionary investment manager) I booked two days' leave, did a lot of research on Google and then completed all the forms and wrote the letters myself.
     
  5. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    #5 Max68, Jul 13, 2019
    Last edited: Jul 13, 2019
    Thanks guys it is indeed a major headache especially as due to caring for mum for the months prior to her hospital stay and recently her move to a care home I'm not working since my redundancy so have been relying on her financial help, with her blessing, so if the COP denies any continuance of those payments to my sister and I, or if it is months before any court decision can be made - I quite simply am done for financially within a month or two! The irony is that if I had worked I couldn't have looked after her as much but could have looked after myself (which was never an option) but not working I could look after her but now find myself close to not a penny to my name. The other irony is that since my illness (that's why I was made redundant even though the company denies it) I can't find work for love nor money as no-one will employ anyone with vestibular hypofunction. It's a nightmare.

    The other irony is that bar her short term memory mum is now pretty lucid in her care home and if you asked her "do you gift your children x amount of cash every three months?" she will remember that but not what she has for breakfast in the morning so legally lacks capacity!!

    I believe that myself and my sister are also Trustees on all the policies she has so I guess it's just removing mum rather than adding us as we are already on there. So unless you need all three trustees to agree on any decisions made about the policies I can't really see a need too remove her and let's just say she passed away sometime in the future or if I did then surely these companies have clauses upon death and that sort of thing so as I say if we see no need to change anything it all seems a bit baffling.

    It's interesting though the links especially a paragraph that states -

    (6)He must consider, so far as is reasonably ascertainable—

    (a)the person's past and present wishes and feelings (and, in particular, any relevant written statement made by him when he had capacity),

    Now I don't think that mum every put anything in writing but one would hope that her Financial Advisor took minutes of his meetings with her and hopefully wrote to her as they usually do just outlining the minutes of the previous meeting so I will contact the FA to see what he thinks especially considering in a months time I will be in need of a Financial Advisor!!!!!!!

    I'll also contact the COP for advice but not sure they could advise on much considering they would be awaiting an official application from us. I have a friend after tonight who is going to put me in touch with his solicitor as well so that's a second opinion.

    I'm panicking now because I never knew about all of this and have used mums money to pay for car parks when she was in hospital and petrol money whilst darting all over the place dealing with her affairs, with agreement with my sister and mum I have too add. I have kept all the receipts but am now having nightmares I will end up in handcuffs!
     
  6. Louise7

    Louise7 Registered User

    Mar 25, 2016
    1,065
    #6 Louise7, Jul 13, 2019
    Last edited: Jul 13, 2019
    That isn't how mental capacity works. It can fluctuate, and someone can be deemed to have capacity in respect of some decisions but not others. In your first post you say that your Mum was 'decreed to lack capacity' - by whom? If there is doubt about her capacity with regards financial decisions perhaps it would be worth an independent mental capacity assessor seeing her?

    Don't worry, you won't end up in handcuffs for buying petrol and paying for car parks.
     
  7. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,021
    Female
    Chester
    Trust law states that a trustee that has lost capacity has to be removed, the companies aren't being awkward, it is the law. Contact them, they might have a proforma, that doesn't need a solicitor, or speak to your FA as I'd be very surprised if he hasn't come across this before.

    Any costs with the FA and solicitor are your mum's not yours which you can use POA to pay so just get on and do it.

    Gifts are a very different category from necessary expenditure.

    All monies that you spend carrying out your role as POA such as car park petrol etc are allowable. I have certainly claimed everything.

    Gifts aren't necessary expenditure which is where you need to take care.

    As louise7 says loss of capacity can fluctuate, it is not linked to short term memory. If your mother understands in the moment that she would like to make the gift then this might be OK.

    I have carried on gifting for birthdays/xmas in the manner my mum did, ie I have continued to give the same amount as she gave us.

    Given from what you have said these are substantial sums, you do need to take professional advice from someone experienced in these matters with a good grasp of them, this might mean a more expensive solicitor, ie a city centre one with a specialist department, but it is your mum's money, and the cost from what you have said will be saved in IHT if it works out.

    As a note gifts out of income don't come into IHT calcs on death, but gifts out of capital do, as the gifts your mum has made seem to be out of income.
     
  8. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    Thanks Louise. She was deemed as lacking capacity in hospital by her hospital Social Worker. Without boring you with the entire saga she was in hospital for 8 weeks and picked up UTI's plus delirium which knocked her for six. Prior to that she was at home but struggling badly with her memory hence why I was caring for her for so long. At hospital she required help with everything but wanted to go home so they had a capacity assessment done and that's how she received the statement which is why I am dealing with her affairs through LPA. She wouldn't be able to deal with her affairs as I am doing them at all due to her memory. She had another memory assessment at the home last week and scored very poorly so it is pretty obvious that between the memory tests and CT scan that there is vascular dementia.

    Even though there are still tears at the home she understands why she is there and accepts that she would struggle badly if she went back home although she still quite bullish at times and thinks she would cope but they have applied for a DOLS and she needs care but in many ways mum is still there and has massively improved since hospital. To show how bizarre it is I was speaking to her and she asked how my car service went. Not well I replied but said I was getting a second opinion and she said "Don't worry I can afford it just get it done" but I can't without someone else's say so. On the other hand she thinks everything in the home is free until I remind her and we have a laugh about it. She was saying some bloke with a piano had come in and played all the old songs which she thoroughly enjoyed. I joked with her that the amount she was paying I hoped it was b***** Liberace and she cracked up so it's like a light switch with mum at the moment and very difficult as one minute you think she would be fine at home and the next understand as to why she is there.
     
  9. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    Thanks Jugglingmum. The Investment company did actually ay we needed a deed from a solicitor - This is what they emailed me.

    "It is our understanding that a Trustee cannot delegate their powers even through Power of Attorney. I would recommend you speak to a solicitor in order to have your mother removed as trustee on the two policies she is a trustee on. You and your sister are already appointed as trustees on all the policies I located.

    If your mother has now lost mental capacity and/or is unable to sign, we understand that as trustees you can replace or remove your mother as trustee using Section 36 (1) of the Trustee Act 1925. However, as per Section 3 (9) this would have to go through the Court of Protection as xxxx holds a beneficial interest (on one of the policies). We would recommend that this Deed is drawn up by a Solicitor, and we would require an original/originally certified copy of the Deed for our records."


    Now I suspect that if you sat down with mum and explained that we needed to remove her as a trustee because of this reason and that reason she would probably take in that information and sign but whether or not she would fully understand half an hour later what she has done and be able to explain it that is doubtful. I guess the difficulty with lacking capacity with regard to the statement is that it's so black and white ie she either lacks capacity or she doesn't.

    Must confess I have always been confused by "gifting". The money each year we receive I did ask the FA about this as I had read that investments for instance aren't classed as income when you gift "out of income" but he said that it was all taken care of as mum has a large Life Insurance Policy that will cover any Inheritance Tax. Of course where those "gifts" came out of Income since 2011 now she is also paying monthly care home fees those gifts might now come out of capital. Baffles the hell out of me!!
     
  10. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,021
    Female
    Chester
    Capacity to
    given she is being removed due to a loss of capacity I don't think you need to involve your mum - she doesn't have to sign anything

    they have recommended a solicitor but not required one. Given you are a bit confused and don't want to make an error and your mum pays I would recommend you use a solicitor, one that is experienced in this field, ie a specialist not a high street does everything - it will cost more but they will get it right.
     
  11. nitram

    nitram Registered User

    Apr 6, 2011
    18,827
    Male
    North Manchester
    You could search for a relevant member of STEP (Society of Trusts and Estates Practitioners) in your area https://www.step.org/for-the-public

    You can also check whether any professional is a member.
     
  12. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    Thank you,

    Jugglingmum, yeah you are right. Mum's solicitors are also solicitors for the elderly so they obviously know what they are doing. However I was a bit baffled by their estimate comments when they said -

    "As you will be aware, we charge on a time costing basis, but we usually find that our fees relating to a straightforward application are in the region of £3500 + VAT, assuming no hearing is required. There is also an application fee payable to the Court of £385. We would usually seek authority in the application for our costs to be agreed by you as Attorneys, but if agreement could not be reached, then our costs would be assessed by the Court. We therefore charge for our time using the Court of Protection’s prescribed charge out rates, which are less than our private rates."

    That's for the application re gift monies I haven't received their quote for the trustee removal as yet. I insisted on a quote prior to any work as I naively asked for more LPA copies as some companies were keeping them and some copied and returned and the solicitor charged a high fee for new copies without telling me first. So not sure if they are saying that if we didn't agree with their fees they would then do the job using the COP's suggestion which would be less than their private rates. So not sure why she is giving us this option as they would receive less although I suspect the COP could award more. Personally I don't see much point in annoying them by refusing their rates and yet asking them to do the work, if you get my meaning!!!! Rather than pay out of mum's current account I guess they could bill the trust funds at source.
     
  13. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,021
    Female
    Chester
    I think they are saying that the quote is based on CoP charge out rates, rather than their normal standard hourly rates, not giving it as an option but saying that is what they have used.

    I think the reference is to the CoP not agreeing their fees, not you, so they have used Cop approved rates. I think this is standard wording they are using, but quite convoluted to fully cover themselves legally and ensure they have tried to explain themselves. If you are unsure you could phone your normal contact and ask for an explanation.

    If they are used to this sort of work they will know how much it costs if relatively straightforward.
     
  14. silversea2020

    silversea2020 Registered User

    May 12, 2019
    81
    Solicitors seem to be indicating that costs would indeed be based on CoP rates, which are set - you can ask for a detailed breakdown of costs so you know exactly what the costs represent - that shouldn’t be a problem
     
  15. Banjomansmate

    Banjomansmate Registered User

    Jan 13, 2019
    965
    Female
    Dorset
    I have LPA and when he was logical The Banjoman always told me to use his money to pay for petrol etc. when I had to take him to hospital and any other appointments and now when I am doing anything on his behalf I still take petrol money as legitimate “expenses”. When I was unable to take him for an essential hospital test one time last year I paid his daughter’s expenses to travel down so that she wasn’t out of pocket when helping out. I consider that legitimate expenditure of his money for his benefit.
    I remind him when it is his daughters’ Birthdays and ask if he wants me to send them money and if so, how much? The same at Christmas. He may be considered as having lost capacity to run his finances but he can still tell me what he wants to do. I consider I am answerable only to him while he is alive and to his executor once he dies.
     
  16. nita

    nita Registered User

    Dec 30, 2011
    1,790
    Female
    Essex
    Are you claiming all the benefits you are entitled to if you are unemployed? I gave up work to look after my mother and I lived on one private occupational pension and carer's allowance. I was 55 so too young for the state pension. You might want to look into that if you can't continue to receive gifts from your mother.
     
  17. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    #17 Max68, Jul 13, 2019
    Last edited: Jul 14, 2019
    Thanks all. Yes Nita I am on Universal Credit but obviously that gets reduced when you report any income but if that income from mum stopped and my remaining funds depleted I would only get the rate of I think it's £346 per month. My energy direct debit alone is £97!! I live alone as well so it's literally just me and when I was unable to work the DWP still decided I was fit despite spinning with vertigo all day. That was the start of mum's payments as I couldn't survive and as I couldn't get ESA . I was fortunate mum helped me out which she also does with my sister because she has a special needs child. Like with many people the government hasn't been kind and once again it seems a government department may be about to put a spanner in the works again!!

    By the way someone above assumed that I was asking for a loan to buy a new car, that's not the case it's car repairs. It does actually say on that government website that you can supply as an LPA an interest free loan but I assume that doesn't apply to yourself! It also says that any gifts should be a benefit to the donor. If I am unable to survive financially I wouldn't be able to continue as mum's LPA and my sister in her own words has no idea what to do as an LPA and has a SEN child to look after and there is only us two left so that would not benefit mum as the donor!

    I'm going to get some serious advice on this as I have spoken to another solicitor today and they have said that if these are regular payments dating back to 2011 it's a normal part of mums expenditure so it should just continue without having to go via a solicitor or the COP. They said that if it was a new payment or a gift out of the ordinary then getting COP permission would be prudent but not for something that is long standing and regular so I am getting different advice from different solicitors which doesn't make things easy!!!
     
  18. Max68

    Max68 Registered User

    Aug 21, 2018
    56
    Male
    Sussex
    Well spoke with another solicitor today who advised that in their opinion the COP wouldn't authorise the continuance of the long term payments due to the fact mum could live another 20 years (she is 83 with vascular dementia) and her estate would be required for her long term care fees and the annual payments, especially considering care fees will increase. Even though including her care fees and the gift payments her income covers it comfortably by a few thousand pounds. The first solicitor said it wouldn't be a problem so who do you believe?! So it looks like I'll need another solicitor now to try and sell my house to downsize!!
     
  19. DesperateofDevon

    DesperateofDevon Registered User

    Jul 7, 2019
    231
    Oh my, you are really going through the mill at the moment.
    Just ring the office of guardians & ask for advice - they don’t ask for personal details & have the knowledge to answer these questions. Plus they don’t charge!
    I am in the car repairs situation as well as have just spent £700 travelling to & from visiting Mum in hospital over 5 1/2 weeks!
    250 mile round trip or 4hours plus 2 train changes each way & a taxi fare. It’s financial drain not taken into account, you want to visit your loved ones - but start being unable to afford to.
    Good luck
    Let me know how you get on
    X
     
  20. prodigal-son

    prodigal-son Registered User

    Feb 1, 2019
    30
    @Normaleila, any chance of a quick link to the forms needed to do this? I've just realised I may have to do the same as you.
     

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