Q&A: Can I invest on behalf of my mum?

Q: My elderly mother has just gone into a nursing home. I have a financial Lasting Power of Attorney (LPA) which currently enables me to act on her behalf to look after her financial affairs. Her memory is getting worse, some dates are better than others, she is not safe though living in her home. 

I’m fortunate in that my mother and I always had open conversations about money and she said when the time comes, she would like me to invest any money she left me in her will. I am keen to do this, however, I’d rather my mum was here to see the results and not wait until she passes away. Can I invest my mother’s money on her behalf under the LPA?

A: Firstly, well done to you and mum for keeping conversations open about money, and for sorting out an LPA which is currently safeguarding her and allowing you to look after day to day finances. 

I appreciate you want to get started on investments as quickly as possible, however if your mum has lost mental  capacity to be involved in the decision making process, as attorney you must act in your mum’s best interests. All investments must be in your mum’s name with you noted as attorney. In these circumstances it is best to consult with a suitably qualified Independent Financial Advisor, IFA as to what is best for your mum, it is not about your potential inheritance.  If your mum’s estate is potentially going to be liable to pay inheritance tax, some IFAs  advise  you to opt for Octopus funds - but these are high risk because the value of investments can also fall, leaving you with less than you paid in. 

Also, due to their high risk, attorneys and court-appointed deputies don’t have the authority to invest in these schemes without approval from the Court of Protection. This sort of thing is wide open to financial abuse - leaving vulnerable pensioners penniless and even homeless due to reckless investors. What’s more, there’s a chance that this could interfere with care later in life, for example, if an elderly person was relying on an asset, such as savings or property, to fund that care, this could be put in jeopardy if it was instead invested and lost via the attorney. Attorneys and deputies also have no authority to invests funds to be managed on discretionary basis unless the LPA or deputyship Order  specifically permits this.

Plus, you need to consider what might happen to any investments if your mum was to pass away. These would become part of her estate and they wouldn’t necessarily be inherited by you, this will depend on the provisions of your mum’s will. When your mum passes away your authority as your mum’s attorney ceases. The executors named in your mum’s will then deal with the administration of her estate.

You don’t mention whether you have other family members, such as siblings or a family of your own. If you are making best interest decisions on behalf of your mum as her attorney you need to involve your siblings in considering the investment  options for your mum.  It’s an extremely complicated area and it is always best to seek legal advice if you do decide to go ahead.

We can help at Downs Solicitors, contact the Private Client team for more information.