I’ve had a number of emails from people who have taken over the savings accounts of relatives and one question that’s come up a couple of times is, can you top up an existing ISA or open a new one if you have power of attorney? Power of attorney is the legal authority to act on someone else’s behalf. And the answer, when it comes to ISAs, isn’t straightforward.
Opening an ISA for someone else
Strictly speaking, only the person whose money is going to go into the account should be able to apply for an ISA (individual savings account). However:
– ISA providers may accept an application from someone who has power of attorney. This is the legal authority to act on someone else’s behalf.
– This applies both to new ISAs that are being taken out and existing ones that are being transferred to a different ISA company.
SAVVY TIP: An ISA manager/company can take applications from someone who has the legal authority to act on behalf of the ISA saver/investor or if that person has a mental disorder or incapacity, a physical disability or illness or because their old age means they cannot fill in the application form themselves.
If you’re in the armed forces
An ISA provider may also accept applications signed under a power of attorney if you’re unable to sign the application because you’re a member of the armed forces on active service in a war zone
SAVVY TIP: HM Revenue and Customs says that these are the only circumstances in which an ISA provider may accept an ISA application from someone who’s not the saver/investor. You couldn’t ask someone else to open an ISA for you because, for example, you were on holiday or were too busy.
Documentation you’ll have to provide
The ISA company is within its rights (and is expected) to ask for the power of attorney document or a certified copy of it . Both carry equal weight in law.
SAVVY TIP: If you’re asked to bring the power of attorney document to a bank or building society branch, that’s fine, but never, ever send the original to a bank or building society as you may never seen it again.
Questions about documents
Guidance from HM Revenue and Customs goes so far as to say that if the document doesn’t make clear why the saver/investor can’t deal with their finances themselves, the ISA provider should:
– Ask for confirmation. They should ask the person making the application to confirm that the investor is incapable of making the application his or her self.
– Verbal confirmation may be enough. If the reason is because of mental disorder or incapacity, physical incapacity or because he or she is a member of the armed forces on active service in a war zone, you only need to explain this to the ISA company verbally. You don’t need to send a letter or email.
Attorneys or deputies
There are two main ways that you can get the legal authority to make decisions about someone’s finances on their behalf.
– If they have taken out a power of attorney agreement. In the case of someone who has lost mental capacity (perhaps because they have dementia), the power of attorney agreement may be a lasting power of attorney (if it’s in England or Wales and taken out after October 2007), an enduring power of attorney (if it was set up in England or Wales before October 2007 or if it’s been taken out in Northern Ireland) or a continuing power of attorney (if it’s been taken out in Scotland).
SAVVY TIP: You can also take out a short term power of attorney, but this can only be used in cases where the person in question still has mental capacity, which means they can still make decisions about themselves. This could be used if, for example, someone is out of the country for some time.
– If they haven’t set up a power of attorney agreement. Here you would have to apply to the Court of Protection for permission to make decisions on someone else’s behalf if they have lost the ability to make those decisions for themselves. In this case, if you’re given this right, you’d be called a ‘deputy’.
Operating an existing ISA
Once someone has opened an ISA, there are no particular HM Revenue and Customs rules about who can run that account. This means:
– If you want to operate an ISA account on behalf of a relative: the bank or ISA provider should treat this as they would any non-ISA account.
SAVVY TIP: It’s not quite that straightforward because with some non-ISA savings accounts, you may be able to operate them for someone else if they ask for your name to be added and for the account to become a joint one. However, you can’t have a joint ISA account.
Photo credit: Morguefile/Pippalou
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