I manage my parents’ financial affairs through a power of attorney and reached out for assistance last October regarding issues accessing their funds held by Clerical Medical.

After a prolonged struggle lasting five months, the matter was finally resolved with your help. I believed I had concluded my dealings with the firm.

However, at the end of July, while logging into my parents’ bank account to settle their care bill, I discovered a surprising Chaps credit of £54,000 from Scottish Widows had been deposited into their account a few days prior. The payment details resembled those from a previous transaction they received from Clerical Medical. This revelation was unexpected, as my father had provided me with a complete list of his accounts and investments, which did not include a second Clerical Medical account. I decided to wait a few days for any relevant correspondence from the insurer.

While normally such a payment might not raise alarms, it posed a significant concern due to my parents’ ongoing home care funded by two live-in caregivers for the past five years. Their financial resources have dwindled to the point where they may qualify for local authority assistance. I regularly update Horsham adult social services about their finances, and a financial review was scheduled for September.

My main worry was that if this payment was indeed a mistake, it stayed in my parents’ account through the council’s assessment, potentially keeping them above the eligibility threshold for financial aid. Furthermore, if the funds needed to be returned but no documentation was provided (we received no communication from Clerical Medical), it could appear suspicious, suggesting we were trying to manipulate their account for financial gain, ultimately harming their financial standing.

During a conversation with customer support, the representative initially cited two account numbers. After placing me on hold for a manager, he returned, explaining it was a mistake; he had mistakenly repeated the same account number. He logged my contact as a new complaint and claimed a letter regarding the credit had been sent to my parents, though no letter was received.

The following day, another customer service representative contacted me. I elaborated on the urgent nature of the issue due to the approaching financial assessment. He reviewed the case and mentioned there was an attempt made in May to deposit money into my parents’ closed Clerical Medical account, which had remained dormant until it was processed as the settlement amount plus interest.

I raised the issue of the second account number, and he assured me it would be investigated promptly in light of the financial assessment timeline. Furthermore, I requested a copy of the purported letter sent at the end of July and ensured that all future correspondence was directed to me; however, I have yet to receive a copy.

Since then, I have had no further communication from Clerical Medical, and upon following up, I was informed that another representative was assigned to my complaint. Now, in September, I am still awaiting a follow-up call or confirmation that action is being taken.

It appears that Clerical Medical continues to disregard my parents’ financial challenges, and this error on their part could severely impact their financial situation.

Response from Jill

While many might be pleased to unexpectedly receive £54,000 in their bank account, for your parents, who are tasked with returning the funds to Clerical Medical while also fearing it could jeopardize their financial aid eligibility, it is a serious setback.

I reached out to Clerical Medical to rectify this situation, which is entirely their fault. Two weeks later, they confirmed that you had successfully returned the funds, compensated you with £600 for their poor customer service, and provided a letter clarifying the circumstances surrounding the money’s appearance in your parents’ account and, significantly, why it was subsequently removed.

You have now completed the necessary forms for the local authority assessment and are preparing to submit them. You had to return the £54,000 to Clerical Medical in three transactions due to daily transfer limits, and you are still waiting for written confirmation that they have received the funds. This lack of responsiveness comes as no surprise.

Query on Gifting £100,000 Without Tax Concerns

I received £150,000 from my parents as an inheritance in 2017, which I have kept aside for potential needs. Twenty years ago, this would have been invaluable for covering mortgages and education expenses, but I don’t have such needs now.

I plan to gift £100,000 to my two children. Currently, my estate falls below the threshold for inheritance tax (IHT). My primary asset is my house, valued at approximately £500,000, alongside £200,000 in savings and assets. However, my wife’s mother has a limited time left to live, and upon probate, her estate will likely equal £250,000.

This anticipated inheritance could push us into the IHT bracket, creating a liability of around £40,000 for my beneficiaries when the house is sold.

If I gift £100,000 to my children now, will they face IHT if I pass away before seven years elapse?

Response from Jill

Although you are 77 and your wife is 70, you’re not concerned about financial depletion in your later years, confident pensions will cover future expenses, including long-term care. Your estate, valued at roughly £950,000, includes your home (£500,000), savings (£200,000, including the £150,000 inheritance), and the expected inheritance from your mother-in-law (£250,000).

According to Claire Roberts, a tax expert, your estate will qualify for two IHT-free allowances when the first of you passes. The standard nil-rate band allows for £325,000, while the residence nil-rate band provides another £175,000, applicable when the main residence is inherited by direct descendants such as your children.

“Transfers between UK-domiciled spouses during their lifetime or after death are exempt from IHT. The nil-rate bands can also be transferred to the surviving partner, allowing up to £1 million of an estate’s value to be sheltered from IHT during the second death. Thus, your estate should not face IHT, provided it is passed to your children,” she noted.

However, you intend to provide financial support to your children now. Roberts explained that a cash gift could be classified as a potentially exempt transfer (PET). “This means that if you survive seven years from the date of the gift, its value will not contribute to your estate’s IHT calculations.”

While considering a £100,000 gift from your joint savings account, it’s essential to note that funds in a joint account are generally considered equally owned. However, HMRC attributes the beneficial interest based on the account holders’ contributions. Thus, this advancement would primarily be viewed as your gift.

Roberts clarified: “If you do not survive the seven-year period after the gift, and presuming you pre-decease your wife, the nil-rate band available on your wife’s passing would be reduced by the amount of the failed PET, to £225,000.

“However, the current anticipated value of your estate after the gift would net £900,000 in total IHT allowances on your wife’s death, meaning no IHT obligations would arise. Alternatively, should estate values increase, your wife could make the gift if it seems likely she would outlive you.”

Your decision to offer financial gifts now won’t incite IHT liability on your estate at present. Nonetheless, taking this action would not incur taxes right now, given existing regulations. While there are speculations over potential IHT alterations in the upcoming budget, any new laws implemented after your gifting are very unlikely to be retrospectives.

Dispute Over Mobile Contract Cancellation With O2

I entered into a mobile broadband agreement with O2 but canceled it within the 14-day cooling-off period. However, I received a debt collection notice shortly after because I hadn’t returned their device. The return was not processed because O2 failed to send the necessary return packaging.

After two weeks and numerous calls to customer service attempting to arrange the return, O2 withdrew £500 from my account for the device.

Despite additional online conversations with O2, where customer service acknowledged their mistake, my funds have yet to be returned, and my credit rating has been negatively impacted. Attempts to file a complaint have also not yielded progress.

The stress of this situation is overwhelming, and I am at a loss on how to resolve it.

Response from Jill

You returned the device to Virgin, affiliated with O2, using your own packaging and courier service, an option Virgin had not previously suggested.

Virgin stated that your contract commenced on August 3, the day after your enrollment, rather than on August 5, when the equipment was received. By the time you called to cancel on August 19, you had surpassed the cooling-off period; therefore, the £500 early termination fee was deemed valid, notwithstanding any issues related to the return packaging.

However, the company also conceded your customer service experience was subpar and acknowledged misinformation from one of its representatives. They promised a refund of the £500 as an exceptional goodwill gesture after processing the device’s return.

They affirmed that the £500 charge had not been forwarded to debt collectors and denied any actions that could alter your credit score. I recommend checking your credit report to verify its accuracy, as the 17-point change might simply correspond to increased credit card or overdraft usage.

For further assistance, please email [email protected] or write to Question of Money, The Sunday Times, 1 London Bridge Street, London SE1 9GF. Submit only copies of original documents. Letters should be exclusive to the publication. We offer guidance without legal accountability and regret that we cannot respond to every inquiry received.