Are assets transferred to an attorney considered gifts under the 7-year rule?

[johngwheeler]

I have a question concerning the IHT status of assets that are legally transferred to an attorney using a Lasting PoA.

In some circumstances the attorney may have difficulty making investments on behalf of the donor using the PoA, and have the need to transfer the assets to themselves as their legal (but not beneficial) owner.

If this transfer is made using the PoA, without being a specific gift from the donor due to incapacity, how will the assets be treated for IHT purposes?

Are they considered to be part of the donor's estate in their entirety, or could they be considered to gifts to which the 7-year taper rule applies?

My assumption is that the former applies because the transfer was not an intentional gift by the owner, and that the full value of the assets would need to be declared as part of the deceased's estate.

However, the value of the assets would be substantially or completely removed from the estate if the 7-year rule applies, which could well affect any eventual IHT bill.

I have been unable to find a definitive answer to this, and would be very grateful to hear your opinions!

[AGoodman]

Tax follows beneficial ownership so the assets would remain part of the principal's estate.

[johngwheeler]

Tax follows beneficial ownership so the assets would remain part of the principal's estate.

Many thanks for the confirmation! Does having assets in an attorney's name cause any other issues with probate applications (e.g. filling in IHT forms)?

[AGoodman]

No, and you might not need probate (although you still have to met any IHT obligations).

It still isn't a great idea and query whether an attorney can transfer assets to himself, even to hold them as a nominee. You should certainly document it and, if the asset is a financial account, need to avoid implying/declaring that the attorney is the beneficial owner.

[johngwheeler]

It still isn't a great idea and query whether an attorney can transfer assets to himself, even to hold them as a nominee. You should certainly document it and, if the asset is a financial account, need to avoid implying/declaring that the attorney is the beneficial owner.

Thank you for your answers. I understand that transfers of ownership to attorneys must be meticulously documented to avoid any hint of misappropriation of assets, and that it is best avoided. Sadly some financial operations (or institutions) still have problems with using a PoA to operate an account.

[state.revenue.contributor]

It still isn't a great idea and query whether an attorney can transfer assets to himself, even to hold them as a nominee. You should certainly document it and, if the asset is a financial account, need to avoid implying/declaring that the attorney is the beneficial owner.

Thank you for your answers. I understand that transfers of ownership to attorneys must be meticulously documented to avoid any hint of misappropriation of assets, and that it is best avoided. Sadly some financial operations (or institutions) still have problems with using a PoA to operate an account.

A transfer of assets to an attorney should always be avoided or, at least, be backed by a court order/direction. Sounds to me as if the LPA was not prepared properly (without legal advice?) as the relevant powers could have been included easily to allow the attorney/s to manage most UK assets.