David Craig, on September 12th, 2016Today, with people living ever longer and no sign of a cure for dementia in sight, I thought I’d pose a modern-day moral dilemma for you.
Imagine a widow in her early nineties. She has increasing dementia and has difficulty remembering what day it is even when using a simple diary. Also she can no longer use basic household appliances like a small oven or microwave.
She has always been generous with money. But since the onset of her dementia, she has become obsessed with the idea that doesn’t have enough money to live on and risks falling into poverty. This is in spite of the fact that she owns her own home and actually gets over twice as much each month from her various pensions than she can spend. In fact, she has completely lost the ability to understand money any more.
The widow has three children. One of the children has Power of Attorney and deals with all the mother’s financial affairs – paying bills and carers, buying food, sorting out her tax etc.
This widow’s money is accumulating in her bank account every month providing a nice, juicy target for the taxman when she dies.
A series of circumstances mean that the widow’s children have the opportunity to do some totally legal inheritance tax planning which would substantially reduce the eventual inheritance tax to be paid. However, the children cannot discuss this with their mother as she would be unable to understand what was being proposed and would worry that her children were trying to cheat her out of her money and that she would be left homeless and penniless.
The children have two options:
They could do some inheritance tax planning without telling the mother, thus fulfilling the mother’s wishes that her money goes to those it’s intended for rather than the taxman. But, if the mother found out, she would be utterly devastated as she would not understand what was being done and so would believe her children have been stealing her money.
Or the children could just let the money continue to increase with around 40% of money that has already been taxed at 20% ending up in the taxman’s pockets and thus being totally wasted on things like providing fortunes to 650 (IMHO) thieving, worthless, scumbag MPs like Keith Vaz and scrounging immigrant families with 5 to 10 children who all want bigger homes and ever more benefits.
What should the children do?
- Should they just leave the money to accumulate allowing the taxman to take 40% and the Government to waste this money on the greedy and the idle?
- Or should they do the inheritance tax planning to reduce the taxman’s take with the risk that the mother might find out and believe her money is being stolen by her children?
(To provide your answer, just click on the title of today’s blog and then you can leave your comment)
Category: 
I am 89, and my daughter has Power of Attorney. You keep the money out of the
tax man’s hands. There are three children and they have to be tight-lipped about what goes
on so that the widow will not find out. You know the old saying, “What you don’t know
won’t hurt you.” By tight-lipped I mean that they do not tell their own families.
Hi,
Yes John above is 100% correct.
Do what mum would have wanted before she got ill and lost her judgment.
That’s why she gave you power of attorney.
Well said, or spend it, If social care becomes needed the situation will become much worse. Most of the capital and even the house value will be used to provide ‘care’. While the bone idle and feckless will have the same ‘care’ or care home placement paid for by, guess who, and if you use mothers capital to pay for her ‘care home’ the cost will include a % to pay the difference between what social services pay and what ‘private fee payer ‘ are charged’ And care at home is a very expensive option if you have the means to pay.
I am utterly against the concept of Inheritance Tax (Death Tax) which ought to be scrapped along with SDLT (Mobility Tax) and Corporation Tax (Job Tax) to name but two.
Apart from the fact it is double taxation, it causes distress in older people and stress to their executors and families whilst unearned money accumulates in the accounts of solicitors and WasteMonster via HMRC. It’s a disgrace but our pollies are almost as frightened of being seen to reward the “rich” as of offending the ethnics so still it lingers on. Think of all the beautiful stately homes demolished or allowed to fall into rack and ruin because of death duties.
Anyway my vote is to definitely undertake tax planning to ensure as much of her hard-earned goes to her desired beneficiaries not to chavs and Somalis etc. PoA was granted because she is no longer competent to handle her property and finances so no discomfort at all should be felt in carrying out the above.
One Child has Power of Attorney. It is his/her responsibility to do what is in the Mother’s best interest – ie fulfil her wishes. This means not allowing any funds to go to the thieving government and its leaches. If the mother has dementia, then she probably wouldn’t understand, but you have to do what is in her best interests.
I am in a similar position.
Agreed as well.
My mother died last month at the age of 90.
Today, I’m screwed.
The government will be getting Many Thousands of Dollars of it, because I didn’t see this coming!
This is after literally spending a lifetime pinching pennies (and not even giving her a proper funeral for the sake of saving money for me).
I think maybe I’ll have a heart attack or stroke before all this is over.
No elderly parent of sound mind would wish to see their children burdened by moral dilemma or guilt when it comes to matters of inheritance. The Power of Attorney is their blessing to you…
Legal obligations are one thing but good faith and moral obligations are another. I would carry out the tax planning and keep the benefit in a designated form so that it can be represented to the donor as her own. I would imagine that cash could be kept in a named account without necessarily invoking a form of trust or affecting the validity of the transfer. An informal agreement could be entered into between the beneficiaries covering an understanding that the money (or assets) will not be touched until such time as appropriate and that as far as you are all concerned between yourselves the money is available to be used for the benefit of the donor as appropriate. This should help to deal with any moral misgivings from acting potentially against the donor’s current wishes.
Finally, I would get some legal advice. I am no lawyer but as a power of attorney exists, and assuming all the potential beneficiaries agree, it should not be beyond the wit of man to devise something that keeps the money away from the greed of the government but also satisfies your moral obligations.
Janner and the rest of em !
Don’t hesitate for a second, protect and hide every single penny my boy .
My mother is 90+ and not rich or mentally compromised but she has what she has through saving and discriminate spending over her lifetime. She is also someone who would never dream of not paying her dues or even ‘bending the rules’ a little. Me and my fellow siblings tried for years to tell her what she should be doing with her few assets, but to no avail. Then luckily the MPs expenses scandal broke and she suddenly saw that what we were proposing was not illegal as she had thought and the way to go ! In reality these things have to be planned some years in advance – before Dementia sets in, by then its too late.