1) Meeting objectives – Other

Question 1

Outline the benefits and drawbacks of Andrea taking out a Group PMI policy to replace the scheme provided by Carl’s employer. (9 points)

Answer 1

Benefits:
* Maintains the benefits of a PMI policy:
* faster treatment;
* choice of hospital and doctor;
* lump sums for overnight stays in NHS hospital;
* rehabilitation/helpline.
* Employer pays the majority of costs.

Drawbacks:
* Premium is a benefit in kind.
* May never claim.
* Exclusions/limitations on cover.

Question 2

Explain in detail to Andrea how Lasting powers of attorney can be set up and why she should consider doing so, as well as any restrictions that may apply. (15 points)

Answer 2

• There is a property and financial affairs LPA (would cover investments).
• There is a health and welfare LPA.
• Andrea can set up either one or both.
• Need to register with the Office of the public Guardian – fee payable.
• A property and financial affairs LPA can be used as soon as it is registered/if the donor does not want this, they should ensure the LPA states this.
• It is not possible to use a health and welfare LPA until the person who made it (the donor) has lost mental capacity.
• Must be a certificate from a prescribed person confirming that the donor understands the LPA;
• and that they have not been pressured into drawing up the document.
• Andrea can appoint one or more persons she trusts to act as attorney (can choose both sons)/can name replacement attorneys.
• Attorneys can be appointed to act jointly or jointly and severally.
• Andrea can impose restrictions on the decisions that can be made.
• Health and welfare covers medical treatment.
• If LPAs are not in place then an application would need to be made to the Court of Protection for a Deputyship Order which can be time consuming and expensive.
• A Deputy is appointed by court rather than family members.
• LPAs ensure Andrea’s wishes are met/provides peace of mind.

Question 3

Explain to Andrea the actions she could take now to reduce her potential Inheritance Tax liability. (6 points)

Answer 3

• Make use of £3,000 pa annual exemption.
• And small gifts of £250.
• And gifts from normal expenditure out of income.
• Discounted gift trust/immediately reduces estate/growth outside estate.
• Make additional pension contributions.
• Charitable/political party donations.