Q. My father took out an equity release scheme on his home about 3 years ago. He has three children, myself and my two brothers. All three brothers were consulted at the time by the financial adviser who set this scheme up. It now appears that my younger brother, unbeknown to my elder brother and myself, has “encouraged” my father into taking a further drawdown against his property and handed the cash to my younger brother to pay his debts off. The issue I have is my father is becoming gradually more confused as he gets older and I feel may not know what he is doing. Is there anything we can do to stop this happening again?
A. Sorry to hear of your predicament, but unfortunately this sort of situation is becoming more prevalent. In the first instance you should write to the provider of the equity release scheme setting out your concerns just as above. With the provider in possession of your concerns they should look at the case as “potentially vulnerable” and seek assurances from a third party professional, such as the original adviser or a solicitor, that your father is making decisions on a rational basis for any further withdrawals he wishes to make. Secondly, if your father is at the stage where you believe he is unable to make his own decisions, then you should consult with your brothers and engage a solicitor to assist in applying to the Court of Protection for one of you to be to be appointed as a Court Appointed Deputy to manage your father’s affairs (unless there is already an enduring or lasting power of attorney).
Q. My mother who was widowed several years ago has been discussing her finances with me and my sister. Her main concern is about death duties. She read an article somewhere recently about the government collecting more in Inheritance Tax (IHT) and she is worried that with her house and savings some IHT will be payable on her demise. I would estimate that the total value of her estate is about £550,000. Unfortunately she relies on her savings to give her an income to supplement her pensions so giving money away is not going to be possible. Do you have suggestions?
A. The first thing to establish is did your late father give any of his estate away when he died to anyone other than your mother? If not and it was left to your mother then she will on her demise have her own IHT Nil Rate Band of £325,000 plus the Nil Rate Band of your late father so potentially up to a further £325,000. This would mean that possibly up to £650,000 could pass free of IHT on your mother’s death in which case there would be no IHT payable if your mothers estate is valued at £550,000. It is true that the government are collecting more in IHT. Recent figures from the Office for National Statistics show inheritance tax (IHT) receipts increasing. During 2013-14 the amount raised was a staggering £3.4bn which is an 8.6% increase compared to the previous year. The main factors to the increase is down to rising house prices and the freeze of the IHT nil rate band at £325,000, which will remain at this level until at least 2019. Assets valued above the threshold are taxed at 40%. To be absolutely certain about your mother’s IHT position I would suggest that you review your late father’s will and possibly discuss this further with your mother’s solicitor or an independent financial adviser.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
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