Legal implications of giving money

[Penny099]

My husband has POA finance for his mother (90)
He had an emergency admission to hospital recently and I had to access my MIL's bank accounts to help her with an overdue bill.
I found a lot more than I bargained for and I wondered what the legal implications are going forward.

My MIL has been giving two of her grandchildren around five thousand pound each for the past five years.

My husband is clearly aware of this as he's been the one transferring the money in regular amounts each month. He's also been removing small amounts of cash from the account for himself.

There are four people in her Will. My husband, our daughter, and the two other grandchildren.

What the legal implications of my MIL giving away this money?
I don't think IHT will come into play as her home isn't worth much, and she's said she's absolutely not going into a home at any point.

[PallasAthena]

His mother's prior gifting history or wishes expressed (and evidenced) when she had full mental capacity are important here.

Does this gov.uk guidance help?

Giving gifts (web version) - GOV.UK

[Tofros]

It sounds like those are regular gifts out of income if the payments are split into regular monthly amounts, are out of income rather than savings, and there is no diminution in her standard of living as a result. If that is not the case then the gifts would exceed her other annual allowance of £3;000 per year and the £7000 per year over and above the 3 for the 7 years prior to death would need to be added back to her estate for calculating if the estate is above the relevant IHT threshold.

The effect on others entitlements under the will depends on the wording. It is an option for prior gifts to be taken into account against entitlements. However, specific wording needs to provide for that.

Perhaps MIL wants the others to benefit without having to change her will. I’m assuming she has capacity.

transfers by POA holders to themselves are less straightforward, but perhaps it is reimbursement of costs incurred on her behalf, or on her instructions?

[Penny099]

His mother's prior gifting history or wishes expressed (and evidenced) when she had full mental capacity are important here.

Does this gov.uk guidance help?

Giving gifts (web version) - GOV.UK

Gifting history has never been large amounts of money, just pocket money in the 90s and 2000s

This is where it fails IMO
Gifts must be reasonable, affordable and in the person’s best interests.

[Penny099]

It sounds like those are regular gifts out of income if the payments are split into regular monthly amounts, are out of income rather than savings, and there is no diminution in her standard of living as a result. If that is not the case then the gifts would exceed her other annual allowance of £3;000 per year and the £7000 per year over and above the 3 for the 7 years prior to death would need to be added back to her estate for calculating if the estate is above the relevant IHT threshold.

The effect on others entitlements under the will depends on the wording. It is an option for prior gifts to be taken into account against entitlements. However, specific wording needs to provide for that.

Perhaps MIL wants the others to benefit without having to change her will. I’m assuming she has capacity.

transfers by POA holders to themselves are less straightforward, but perhaps it is reimbursement of costs incurred on her behalf, or on her instructions?

Her only income is basic state pension and attendance allowance. These gifts to two grandchildren is largely coming from her savings.

Her standard of living is woeful - no central heating, no proper kitchen, can't wash properly.

I didn't know about specific wording for prior gifts. I will look into that.

She technically has capacity, as she is of sound mind, but doesn't have any understanding about money and never has done. She can't work out figures at all, even struggles with her phone number and her date of birth. I have been shopping with her years ago and she couldn't work out her change.

I wondered if my husband will be in trouble if he's been dishing out money that maybe he shouldn't have been.

[atticus]

The words "if" and "maybe" are doing a lot of work here.

Has your husband been 'dishing out' money that he should not have paid out? Have you spoken to him about this?

[Penny099]

The words "if" and "maybe" are doing a lot of work here.

Has your husband been 'dishing out' money that he should not have paid out? Have you spoken to him about this?

He says he has been doing what his mother wished, but hasn't questioned whether it's within the rules of what he should be doing as deputy. I know only too well that he has a blasé attitude to things like this. His mother says she should be able to give money to whoever she wants.
I just wanted to clarify if that's the case if there's no IHT to worry about.

[Tofros]

Assuming the estate plus approx 49k (the total of 7 years gifts in excess of the current annual gift allowance) to be under the current relevant IHT thresholds and allowances then if he is acting on her instructions it may well be ok. It is important to keep records (of the gifts as well as MILs instructions to make the payments) because it could come into question if
a) the IHT or gifting thresholds are changed prior to MILs death
b) she needs at home or care home care despite her wishes
c) any beneficiary disputes the conduct of the attorney after MILs death

[Penny099]

Assuming the estate plus approx 49k (the total of 7 years gifts in excess of the current annual gift allowance) to be under the current relevant IHT thresholds and allowances then if he is acting on her instructions it may well be ok. It is important to keep records (of the gifts as well as MILs instructions to make the payments) because it could come into question if
a) the IHT or gifting thresholds are changed prior to MILs death
b) she needs at home or care home care despite her wishes
c) any beneficiary disputes the conduct of the attorney after MILs death

Thank you.

I didn't realise a dispute could be raised after death. I was told, probably by someone less informed than yourself, that it could only be done when the MIL is alive.

I've been doing some reading around disputing, and wondered how much this comes into play -

• Making secretive decisions without consulting co-attorneys or family

Also from the Gov website: Who are the gifts for?


In deciding whether gifts are reasonable, you should also consider whether:

• you are treating members of the family equally – if not, is there a good reason?

Both points are being ignored by my husband. He won't say why MIL is giving to two grandchildren and the third receives nothing. It has all been kept secret.

I've been going through paperwork that we have in the house relating to MIL. I don't think my husband realises there are rules to follow. I don't believe he keeps any records, apart from bank statements. Is that enough? There's nothing to say his mother agreed to him taking cash from the account.
I don't believe he's acting in her best interests as her bank account is being drained and she could need care further down the line. She had a sibling who lived to 102!

[PallasAthena]

I didn't realise a dispute could be raised after death. I was told, probably by someone less informed than yourself, that it could only be done when the MIL is alive.

There may be different things being discussed here.

After MIL's death the Executors (on behalf of the beneficiaries) might have the power to take action to recover money improperly taken from the estate prior to the testator's death. I think this is what Tofros is referring to (Tofros?).

What you may have been told is whether the Office of the Public Guardian will take action if an Attorney is abusing their powers and acting improperly. From my personal experience discussing such a case with OPG their position is that they may investigate and intervene if the Donor is still alive but as soon as the Donor dies the LPA terminates and so OPG will no longer investigate or get involved.

[Penny099]

There may be different things being discussed here.

After MIL's death the Executors (on behalf of the beneficiaries) might have the power to take action to recover money improperly taken from the estate prior to the testator's death. I think this is what Tofros is referring to (Tofros?).

What you may have been told is whether the Office of the Public Guardian will take action if an Attorney is abusing their powers and acting improperly. From my personal experience discussing such a case with OPG their position is that they may investigate and intervene if the Donor is still alive but as soon as the Donor dies the LPA terminates and so OPG will no longer investigate or get involved.

Ah yes, that makes sense, thank you. The sole Executor is my husband.

[Tofros]

[QUOTE=PallasAthena;n1720549]


After MIL's death the Executors (on behalf of the beneficiaries) might have the power to take action to recover money improperly taken from the estate prior to the testator's death. I think this is what Tofros is referring to (Tofros?).

Yes, that is what I meant.

[Tofros]

When a financial LPA is created the donor (MIL) has two choices about the circumstances in which the holder can act - either straight away i.e while the donor has capacity, or only if the donor loses capacity.

If the donor chose the straight away option then the holder needs the permission of the donor to act and can only do what he is instructed to do by the donor. If they chose only after they lose capacity, the holder would need evidence to show that loss of capacity had happened before they could act but even then should make efforts to involve the donor in decisions as far as possible and alwys act in the donors best interest.

There can also be wishes on gifting included in the LPA. Does it contain any such wishes?

However, it seems that in either scenario (capacity or not) there are strict limits on gifts which can be given by or via an attorney. Whilst it is true that MIL can give whatever gifts she wants, she may not be able to ask her attorney to execute those instructions if the gifts exceed the legal limits ( which they appear to) and it would be necessary for her to act to make the gifts herself.

I would recommend taking legal advice.

[Frank1]

Taking the pessimistic position:
Your MIL may have to go into a care home or receive paid home help if and when she is no longer capable of looking after herself. As your husband is giving away large sums of her money, albeit with her permission, the LA may regard the gifts as deliberate intention to reduce her savings below £23,250 or £14,250 to avoid paying towards fees for her care.
Apart.from your husband, the beneficiary that is going to lose out financially is your daughter. Is she aware of this. If not, shouldn't her father let her know. She could be happy that her cousins are benefiting now. On the other hand she may be very upset and threaten future legal action against the executor.