Power of Attorney question


S

Steve

Hi All,

Wasn't sure whether to ask in here on in Legal, but you guys won (lost?!?)

My wife has POA over her Mother's finances as she is both physically and
mentally incompetent due to MS. My wife is concerned about what records
and receipts she should keep in case anybody was to audit the accounts
etc, say after the passing of her Mother. The Mother is in a care home
but still has her house in her name, which the wife has assumed
responsibility for. She has to look after any expenditure for the upkeep
of the house and occasionally uses unreceipted cash payments for things
such as small cash gifts at Christmas, or minor maintenance service on
the property.

The question is, what is she required to keep records for and what
'audits' are likely/possible to take place?

The total value of the estate and investments is much less than the 300k
tax threshold if that makes a difference. Also, the wife's brother also
has POA, but he does not get involved with anything whatsoever.

In addition, and I know this might sound 'dodgy' but it's just
clarification for me, but with the POA, what is the wife 'allowed' to do
with the money and what isn't she - I assume she can do anything on her
Mum's behalf, but not go on a 6 month cruise herself etc (although who
would check / know)?

Thanks for your time folks, always appreciated.
S
 
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C

Charlie

My wife has POA over her Mother's finances as she is both physically and
mentally incompetent due to MS. My wife is concerned about what records
and receipts she should keep in case anybody was to audit the accounts
etc, say after the passing of her Mother. The Mother is in a care home
but still has her house in her name, which the wife has assumed
responsibility for. She has to look after any expenditure for the upkeep
of the house and occasionally uses unreceipted cash payments for things
such as small cash gifts at Christmas, or minor maintenance service on
the property.

The question is, what is she required to keep records for and what
'audits' are likely/possible to take place?

The total value of the estate and investments is much less than the 300k
tax threshold if that makes a difference. Also, the wife's brother also
has POA, but he does not get involved with anything whatsoever.

In addition, and I know this might sound 'dodgy' but it's just
clarification for me, but with the POA, what is the wife 'allowed' to do
with the money and what isn't she - I assume she can do anything on her
Mum's behalf, but not go on a 6 month cruise herself etc (although who
would check / know)?
I have a POA over my uncle's affairs, as he has disappeared into the
twilight world of accelerated dementia. The onset was so rapid that we
only just managed to get him to sign off, to the solicitors'
satisfaction that he was still sufficiently compos mentis to know what
he was doing.

I was given no instructions about what receipts needed to be retained.
It helps that I am the old boy's only heir, bar a handful of small
legacies, and the eventual estate will be below the IHT radar, so there
will be no disagreeable arguments or repercussions when he dies.

In short, my advice would be to retain documentation for anything
substantial, but don't worry unduly about keeping every last receipt.
Remember: de minimis non curat lex!
 
R

Roger Mills

Hi All,

Wasn't sure whether to ask in here on in Legal, but you guys won (lost?!?)

My wife has POA over her Mother's finances as she is both physically and
mentally incompetent due to MS. My wife is concerned about what records
and receipts she should keep in case anybody was to audit the accounts
etc, say after the passing of her Mother. The Mother is in a care home
but still has her house in her name, which the wife has assumed
responsibility for. She has to look after any expenditure for the upkeep
of the house and occasionally uses unreceipted cash payments for things
such as small cash gifts at Christmas, or minor maintenance service on
the property.

The question is, what is she required to keep records for and what
'audits' are likely/possible to take place?

The total value of the estate and investments is much less than the 300k
tax threshold if that makes a difference. Also, the wife's brother also
has POA, but he does not get involved with anything whatsoever.

In addition, and I know this might sound 'dodgy' but it's just
clarification for me, but with the POA, what is the wife 'allowed' to do
with the money and what isn't she - I assume she can do anything on her
Mum's behalf, but not go on a 6 month cruise herself etc (although who
would check / know)?

Thanks for your time folks, always appreciated.
S
My wife and I (but I did all the work!) had Enduring POA for my
father-in-law during his last few years. He was (just about) compus
mentis, so we didn't need to register the POA with the Court of
Protection. [This was a few years ago, and the rules have changed since
then, so I'm not sure which rules apply to you].

In our case, I was able to do virtually everything which f-i-l could
have done for himself - including operating his bank accounts, selling
his house when he came to live with us, making gifts on his behalf
(including giving away sufficient amounts within the rules to keep him
below the IHT threshold).

When he died, we obtained probate and administered the estate - which
was very straightforward because, apart from a couple of very small
legacies, my wife was the sole beneficiary.

In your case, I would approach it from the point of view of considering
what will happen when the Mother ultimately dies. I presume she has made
a will? Who are the executors - is your wife one of them? In any event,
you'll need probate in order to sell the house (if not done prior to the
death) and in order to get access to the investments. [POA dies with her
- so you can't use that after she has died].

Whether your wife applies for probate herself, or whether someone else
(e.g. a solicitor) does it, she will have to provide the bulk of the
information for the various forms. An IHT205 form will be required even
if no IHT is due.

I suggest that you look at the Probate Information at
http://www.hmrc.gov.uk/inheritancetax/intro/probate-process.htm and
follow the links to find the necessary forms and guidance notes. If you
go through the motions of filling in the forms, this will tell you what
information will be needed - which should help you to decide what
records you need to be keeping now.

Assuming that the brother will ultimately get a share of the estate, you
also need to make sure that you can account for any significant
expenditure which would reduce the value of the estate - and thus his share.

Hope that helps!

BTW, we bought a DIY POA kit from W H Smiths, and that has a helpful
booklet - including a section about what Attorneys can and can't do. I
could scan the relevant bits of that and email them to you if that would
help. If you wish me to do that, please send me a private message (the
email address in the header DOES work) confirming your email address.

--
Cheers,
Roger
____________
Please reply to Newsgroup. Whilst email address is valid, it is seldom
checked.
 
S

Steve

My wife and I (but I did all the work!) had Enduring POA for my
father-in-law during his last few years. He was (just about) compus
mentis, so we didn't need to register the POA with the Court of
Protection. [This was a few years ago, and the rules have changed since
then, so I'm not sure which rules apply to you].
POA obtained several years ago, similarly, when the M.I.L. could sign
the documents (with solicitor present IIRC)

In our case, I was able to do virtually everything which f-i-l could
have done for himself - including operating his bank accounts, selling
his house when he came to live with us, making gifts on his behalf
(including giving away sufficient amounts within the rules to keep him
below the IHT threshold).

When he died, we obtained probate and administered the estate - which
was very straightforward because, apart from a couple of very small
legacies, my wife was the sole beneficiary.

In your case, I would approach it from the point of view of considering
what will happen when the Mother ultimately dies. I presume she has made
a will? Who are the executors - is your wife one of them? In any event,
you'll need probate in order to sell the house (if not done prior to the
death) and in order to get access to the investments. [POA dies with her
- so you can't use that after she has died].
Well, unfortunately, I don't think there is a will, certainly not that
we know of. There is only my wife and her Brother. It is likely the
wife will apply for probate and the Brother will just take his half of
what there is (simplistic assumptions at this point!) as he won't want
the responsibility of dealing with any of it.


Whether your wife applies for probate herself, or whether someone else
(e.g. a solicitor) does it, she will have to provide the bulk of the
information for the various forms. An IHT205 form will be required even
if no IHT is due.

I suggest that you look at the Probate Information at
http://www.hmrc.gov.uk/inheritancetax/intro/probate-process.htm and
follow the links to find the necessary forms and guidance notes. If you
go through the motions of filling in the forms, this will tell you what
information will be needed - which should help you to decide what
records you need to be keeping now.

Assuming that the brother will ultimately get a share of the estate, you
also need to make sure that you can account for any significant
expenditure which would reduce the value of the estate - and thus his
share.

Hope that helps!
It does, many thanks

BTW, we bought a DIY POA kit from W H Smiths, and that has a helpful
booklet - including a section about what Attorneys can and can't do. I
could scan the relevant bits of that and email them to you if that would
help. If you wish me to do that, please send me a private message (the
email address in the header DOES work) confirming your email address.
That's very kind of you, thank-you - I have sent a separate e-mail.

Regards
Steve
 
S

Steve

I have a POA over my uncle's affairs, as he has disappeared into the
twilight world of accelerated dementia. The onset was so rapid that we
only just managed to get him to sign off, to the solicitors'
satisfaction that he was still sufficiently compos mentis to know what
he was doing.

I was given no instructions about what receipts needed to be retained.
It helps that I am the old boy's only heir, bar a handful of small
legacies, and the eventual estate will be below the IHT radar, so there
will be no disagreeable arguments or repercussions when he dies.

In short, my advice would be to retain documentation for anything
substantial, but don't worry unduly about keeping every last receipt.
Remember: de minimis non curat lex!
Thanks for the reply, I kind of figured that small irrelevant sums would
not be an issue. I understand it only *might* be a problem if the
brother contents the expenses etc when she dies.
 
C

Charlie

Well, unfortunately, I don't think there is a will, certainly not that
we know of. There is only my wife and her Brother. It is likely the wife
will apply for probate and the Brother will just take his half of what
there is (simplistic assumptions at this point!) as he won't want the
responsibility of dealing with any of it.
Unless your m-i-l is *completely* mentally incompetent, MS being
primarily physical rather than mental, I suggest that you draw up a Will
now, which she might sign in the event of any short period of respite
and lucidity. Although the intestacy laws are straightforward -
http://www.willsandprobateservice.co.uk/intestacy-dying-without-a-will.html?gclid=CImposuy6qkCFZRX4QodDliCWA
- your wife might get lumbered with the otherwise unjustifiable expense
of a solicitor if the brother-in-law proves anything less than 100%
compliant.

The Will could be utterly simple. One clause would appoint the Executors
(your wife and, possibly, b-i-l). The next would decree that the estate
be divided in presumably equal shares. Signed by the m-i-l and
witnessed by care home manager or friends whom you bring in for the
purpose.

Avoid professionals if at all possible, as they have a vested interest
in delay . Okay, they *CAN* have; admittedly not all solicitors,
accountants and bank managers are self-serving, grasping and
unprincipled scoundrels, just as not all balls are round. I received
probate on my father's fairly complicated estate (which included such
problems as his Lloyds membership) within 3 months, and distributed it
inside another 3. Conversely, a friend is in the hands of a country
solicitor who has still not got probate (on his mother's small and
simple estate) after more than 2 years. His elder brother's the
executor, but isn't man enough to face up to the lawyer. The estate is,
inevitably, getting ever smaller!
 
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R

Roger Mills

Well, unfortunately, I don't think there is a will, certainly not that
we know of. There is only my wife and her Brother. It is likely the wife
will apply for probate and the Brother will just take his half of what
there is (simplistic assumptions at this point!) as he won't want the
responsibility of dealing with any of it.
That makes it a bit more complicated - and you'll need Letters Of
Administration rather than Probate. The laws of intestacy will apply but
- in your case - I think that will result in the estate being shared by
the two 'children' - which is presumably what she would have wanted anyway.

As others have said, it may not be too late to draw up a simple will and
get it witnessed, unless she is totally gaga. We did that for my maiden
aunt only a few days before she died - and it made life a hell of a lot
easier for my cousin and I who had the job of administering the (very
modest) estate.
That's very kind of you, thank-you - I have sent a separate e-mail.
I *think* I have sent you something, but I got an odd error message, so
please check and confirm.
--
Cheers,
Roger
____________
Please reply to Newsgroup. Whilst email address is valid, it is seldom
checked.
 
S

Steve

My wife and I (but I did all the work!) had Enduring POA for my
father-in-law during his last few years. He was (just about) compus
mentis, so we didn't need to register the POA with the Court of
Protection. [This was a few years ago, and the rules have changed since
then, so I'm not sure which rules apply to you].
POA obtained several years ago, similarly, when the M.I.L. could sign
the documents (with solicitor present IIRC)

In our case, I was able to do virtually everything which f-i-l could
have done for himself - including operating his bank accounts, selling
his house when he came to live with us, making gifts on his behalf
(including giving away sufficient amounts within the rules to keep him
below the IHT threshold).

When he died, we obtained probate and administered the estate - which
was very straightforward because, apart from a couple of very small
legacies, my wife was the sole beneficiary.

In your case, I would approach it from the point of view of considering
what will happen when the Mother ultimately dies. I presume she has made
a will? Who are the executors - is your wife one of them? In any event,
you'll need probate in order to sell the house (if not done prior to the
death) and in order to get access to the investments. [POA dies with her
- so you can't use that after she has died].
Well, unfortunately, I don't think there is a will, certainly not that
we know of. There is only my wife and her Brother. It is likely the wife
will apply for probate and the Brother will just take his half of what
there is (simplistic assumptions at this point!) as he won't want the
responsibility of dealing with any of it.


Whether your wife applies for probate herself, or whether someone else
(e.g. a solicitor) does it, she will have to provide the bulk of the
information for the various forms. An IHT205 form will be required even
if no IHT is due.

I suggest that you look at the Probate Information at
http://www.hmrc.gov.uk/inheritancetax/intro/probate-process.htm and
follow the links to find the necessary forms and guidance notes. If you
go through the motions of filling in the forms, this will tell you what
information will be needed - which should help you to decide what
records you need to be keeping now.

Assuming that the brother will ultimately get a share of the estate, you
also need to make sure that you can account for any significant
expenditure which would reduce the value of the estate - and thus his
share.

Hope that helps!
It does, many thanks

BTW, we bought a DIY POA kit from W H Smiths, and that has a helpful
booklet - including a section about what Attorneys can and can't do. I
could scan the relevant bits of that and email them to you if that would
help. If you wish me to do that, please send me a private message (the
email address in the header DOES work) confirming your email address.
That's very kind of you, thank-you - I have sent a separate e-mail.

Regards
Steve
Thanks for the replies regarding the will guys. Unfortunately, the MIL
has long since been able to hold a pen, let alone sign anything. To
make matters worse, she has recently been developing mild demential
(apparently brought on by the MS, but I'm not sure.)

I think we will need to investigate whether a will was made and kept
with the solicitor, and find out the best steps regarding getting one
made if not (if this is possible now given her state)
 
D

David Woolley

Steve said:
My wife has POA over her Mother's finances as she is both physically and
mentally incompetent due to MS. My wife is concerned about what records
If the M-i-L lacks mental capacity, you had better have a registered EPA
or LPA, not just an ordinary POA, which would now be void.
and receipts she should keep in case anybody was to audit the accounts
If she is in a care home, what expenditure would you actually incur for
her that would be small enough that you might want to consider not
keeping the receipts? To the extent that things don't justify receipts,
I would suggest establishing a cash float, which is kept physically
separate from your money. Even then, business would be expected to
account for every transaction on that.
The question is, what is she required to keep records for and what
'audits' are likely/possible to take place?
Assuming a registered LPA or EPA, you would probably only get audited if
a relative or friend challenged your suitability to be an attorney.

If not, I believe that, once the court has awarded you any control of
the money, annual audits are needed, which is why getting an LPA in time
is very important, especially if you are not a husband/wife/partner, who
might have access to a joint account.

In addition, and I know this might sound 'dodgy' but it's just
clarification for me, but with the POA, what is the wife 'allowed' to do
with the money and what isn't she - I assume she can do anything on her
The current position is that you should try to do what she would have
done, if she had had the mental capacity to do so, and had the same fact
available. In addition you should try and consult her at whatever
residual level of mental capacity she has. That may mean, very simple,
high level policy questions.

Gifts would probably be judged by a combination of the sort of gifts she
made when she had capacity, adjusted for inflation, and limited by what
she could afford to give.

If she has capacity, you can only do what she gives informed consent for
you to do.
 
C

Charlie

If the M-i-L lacks mental capacity, you had better have a registered EPA
or LPA, not just an ordinary POA, which would now be void.
I hesitate to take issue, but it was/is my clear understanding that an
existing 'old style' POA remains valid. It is simply that all POAs
registered since date X (October 2007, if memory serves) must take the
new (and inevitably far more expensive) EPA/LPA form. Thus I have a new
EPA for the uncle, but an old POA for my mother.
 
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D

David Woolley

Charlie said:
I hesitate to take issue, but it was/is my clear understanding that an
existing 'old style' POA remains valid. It is simply that all POAs
registered since date X (October 2007, if memory serves) must take the
new (and inevitably far more expensive) EPA/LPA form. Thus I have a new
EPA for the uncle, but an old POA for my mother.
POAs ceases on lack of mental capacity

EPAs must be registered on loss of mental capacity, and new ones are no
longer possible

LPAs must be registered before they can be used at all.

Whilst banks will normally ask you to register a POA with them, there is
no legal requirement to register. Registration of EPAs and LPAs is with
the government/courts.

Date X relates to the switch from EPAs to LPAs for new ones and it
relates to when the document was created, not when it was registered.
 
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