DM making request to give away a lot of money

[LPADilemma]

At the moment I just have control of 2 bank accounts because DM was ill and bank transfers were needed. DM is well over 90 and only writes cheques. Yesterday DM says she wants to write cheques to each grandchild for £10,000 each. This would amount to over 60% of available funds. Some of which are not very liquid due to end dates for savings being a little bit down the line. Dm owns her home.

She now has far more care needs to stay in her house. She’s in hospital right now and I doubt that she’s come up with this idea herself. Never mentioned it before. I’ve no doubt it’s come from another member of the family. My instinct is to tell DM it’s a very bad idea but she still has capacity. If she does decide to do this, I might see if I can relinquish LPA because I’m sure it’s wrong. However she’s capable of making decisions but the implications of giving the money away might not be understood. How should I deal with this? My DC would benefit but she would need to sell her home and move (it’s small!) when the remaining money runs out. It will.

Can you suggest she gives a smaller amount eg £1000?

How many grandchildren? There are limits on allowable gifts within IHT, maybe suggesting gifts at that level would be a good compromise

Do you have both financial and health LPoA?

Wouldn't there be a inheritance tax on this if she died within 7 years? Could you suggest she changes her will and leaves them this?

This will be seen as deprivation of assets if she requires council funded care in the future. Have a look at age uk.

she’s capable of making decisions but the implications of giving the money away might not be understood

If she is not able to understand the consequences of a decision, she does not have capacity to make it - one of the key tests of capacity is the ability to understand the consequences of taking vs not taking a decision.

Inheritance tax is highly unlikely to be an issue.
Deprivation of assets might be, though, if she already has care needs..

I'd have a conversation with her about her wish to stay in her house, and how giving this amount away will jeopardise that wish @LPADilemma .
It's really difficult. I manage my mum's account, as she's paralysed and largely bedridden. She absolutely has capacity, but is spectacularly unwise. The feeling I have that it's absolutely wrong to disregard an instruction that, but for her paralysis she could carry out for herself, is tempered by the knowledge that it will end in tears for us both.

So far, through long conversations and (fortunately) her being distracted by something else and forgetting that she'd wanted something, I've not yet had to not the bullet and make a decision one way or another. But it will come, I've no doubt.

I can't help much, but I can empathise.

It does occur to me though, that if you genuinely think that as sibling is behind this, you could use deprivation of assets as the reason it's unwise, when you talk to the sibling.

Whoever suggested this to your dm needs to read up on this, send them a link

You cannot take this money for the DC knowing it will result in a last in her 90s having to sell her home and downsize. That would be a horrific move in her position.

It's fine to say no to her. This isn nothing to do with the legal situation either, it would be an awful thing to do morally.

My DM used to do things like this (though, in her case, to spend money she couldn't afford on herself, not others!).

I found the best approach was an unemotional, very clear statement of facts: you will not have enough money to stay in your own home (her priority) if you do this.

It's fine to say no to her. This isn nothing to do with the legal situation either, it would be an awful thing to do morally.

It isn't fine to just refuse to do it though. Its her money and she has capacity. Having financial LPA had its legal responsibilities, and if someone has capacity then they're entitled to make their own decisions, even if they're unwise. Trust me, I've been managing this situation for more than a decade.

Ultimately it comes down to this. If you were struck by some terrible accident tomorrow and became physically unable to carry out your own transactions, but had full mental capacity and were otherwise the exact same person that you are today, would you want your decisions overridden by the person who had the power to use your bank account? I can guarantee that you wouldn't.

@saraclara

It isn't fine to just refuse to do it though. Its her money and she has capacity.

I may have assumed all the grandchildren are OPs DC, if not then perhaps things may be different but of course you can refuse a gift of £10k for your child.

In any case she doesn't understand the implications of giving away her money so legally it should not be done.

If she has enough money to pay for her future care needs (i.e. the value of her home and any pensions) then it's not deprivation of assets. It would be counted for inheritance tax if she dies in the next 7 years though, on a sliding scale. If you have general power of attorney to be able to act for her but you believe she has capacity then it's possible. If you have power of attorney because she doesn't have capacity then you can only really give gifts that she would usually do (e.g. if she gives each grandchild £100 for their birthday then you can continue doing that).

That's not how the judgement of capacity works.

@LPADilemma you can absolutely advise your mum. That is no problem at all with regard to your LPA. You do need to spell it out that, generous though her offer is (that your children would benefit from) it would leave her vulnerable to losing her house should she need a higher level of care. And also they would be required to pay it back if after a period of time the council had to pay for her care.

I think this is the best you can do. Spell it out, show her the links, and remind her how important her home is to her. Show your appreciation of her generosity, but give her the information she needs to make an informed decision.

@saraclara

That's not how the judgement of capacity works.

How does it work then?

That is a reasonable point given that she's ninety. But in twelve years, my mum's care has taken the proceeds of the house she lived in, plus the house she owned as a rental, plus all of her savings and income. Now the council is having to pay.

That's what happens when care costs £6,500 a.month. OP's mum's house could easily all go very quockly, depending on where she lives. .

Yes this

Starting with a brisk mum you can’t do that.

Capacity in this case is about understanding what the money in her account is, what the amounts are, that she understands who she's giving it to, and that she understands that when it's gone, it's gone.

The baseline for capacity is very low. If the person understands those things, they are perfectly entitled to make unwise, uninformed, or just plain stupid decisions. Just as people who can write their own cheques or use online banking can.

Yes, true, my grandmother's care home was more like £3500 a month and more than half was covered by her pension but prices will have gone up a lot I imagine in the last few years.

Yes, this

people talking IHT is least of issues here.

she needs to be in care home, you say op? Then yep, deprivation of assets and councils are so strapped for cash they will pursue . Gone are days when you can decide to give money away in your old age without it being a small amount. And that’s usually defined by same rules as IHT in terms of “ allowable gifts”

she can give £3000 between all gc each year between now and when she dies. That may be much better approach. She can also gift any small gifts of under £250. And she could give more in special circumstances like wedding. The local authority would be unable to define that as deprivation of assets.

explain this to her. Explain the risk to her choices around her care plans in terms of where she can live, what she’ll be able to enjoy etc. does she realise that £10k is fees for less than 7 weeks typically ?

I don’t see anything about an LPA that requires the attorney to take positive action if they don’t want to, for any reason at all. An LPA doesn’t make you a slave to your principal, so you can just say no.

I also agree that the bar for capacity is very very low; this doesn’t sound like a capacity issue at all.

You're entirely wrong. You cannot just refuse to carry out the legal financial instructions of someone with capacity.

If you don't want to carry them out, then you get yourself de-registered and have someone else who respects the position, to do it.

@LPADilemma - I feel for you. It is very common with a lot of older people as they get frailer etc and older and having to face the fact that they might not have much longer on this earth, start to think about giving people - especially their grandchildren - money from their accounts, as they want to see them enjoying the cash while they are still alive.

The 'Capacity' here is the issue and is by no means straightforward. As you are clearly aware, as POA you can't just refuse to do what they want if they are capable of letting you know what they want to happen - even if the decisions are foolish or not , in your opinion, sensible. My Mother was the same. But what you can do, is be blunt about giving her advice and all the pros and cons.
available when you talk to her about it.

Lots of good information by other posters here, so check them out and have all the information available when you speak to her. In particular @Appleofmyeye2023 has given very good information as has @saraclara (several posts)

Of course you can refuse to act. Just say no. There is no penalty for refusing.

the principal can then, if they wish, revoke your LPA and appoint someone else.

I think you may be misunderstanding the point of an attorney- it’s to make decisions independent of the principal but in their interests.

If you want someone only to follow your exact instructions in operating your bank account there are other ways to give signing authority.

An attorney is not the same as an employed personal assistant who is paid a salary and can be instructed with duties and sanctioned (by dismissal) for failing to carry them out. Don’t confuse the two.