Financial Lasting Power of Attorney, Self-funding Care and Taxation
Holding Financial Lasting Power of Attorney for someone needing care is a big responsibility and not something to be undertaken lightly. It means more than making sure Mum or Dad is running their bank account correctly, or that bills are paid – although that forma a part of the responsibilities.
If you are caring for a family member and have a Financial LPA you are legally responsible for their financial wellbeing. This means ensuring that investments are appropriate and properly managed, correct management of any commercial interests they may have, and ensuring that spending is on their behalf is affordable and appropriate. This also includes filing tax returns, paying taxes and other duties (e.g. drainage rates). This will lead to administrative work, travel and phone calls – all of which cannot be claimed as a legitimate expense.
We do this to protect our loved ones and their financial affairs and prevent the government from appointing a solicitor to manage their financial affairs – for which they are allowed to charge (hearsay evidence approximates £50 to make a single payment regardless of amount).
For those of you wondering about taking on this responsibility, and what sanctions might apply for incorrect management:
• In-depth investigation by the Office of the Guardian
• Demand for full repayment to the accounts of the individual for anything deemed as inappropriately paid
• Court action with the potential for a jail term
• Appointment of a solicitor to run the LPA (please see above)
In a nutshell you have a lot of legal financial responsibilities, and add to that the general care and support which you give, source and facilitate – trips to hospitals, doctors, etc. etc. which you cannot claim for, either from the accounts you manage or against tax or income of your own.
This is mildly irritating, but in the scheme of things, when you’re supporting someone with dementia, but not really note-worthy.
What really gets my goat is that I am legally and financially responsible for ensuring income and investments/savings are protected, to ensure that care can be paid for. After all, if the money were to run out the state would have to fund the care. So why is it that the income from savings and investments is taxed in full without taking the cost of care into account? As needs increase the cost of care rises, but there is no consideration for this in taxation policy – the consequence of this for many will be faster reduction in funds, eating into capital to pay living and care costs and tax. So who are we protecting the money for, our loved ones or HMRC? Who fine you if you are a moment late submitting or paying tax.
As the government did a rapid about-turn on the pledge to cap care costs at £75,000 in the original Care Act, are they going to make any provision to help those that saved for their retirement? What is the incentive to save, if the state picks up the tab for those that don’t, but doesn’t help and taxes those that do?