USC as power of attorney for UKC?

We're dual USC/UKC with power of attorney for a UKC (parent). I didn't think this had any implications as the account is owned only by a UKC, but an investment company is raising concerns. They say we need to notify the IRS and they will block the account because we are USC.

Does anyone have any insight or experience?

Thanks, Jonathan

No experience or knowledge but not surprised that you have to inform the IRS as you have signature authority over a foreign account. You will have to report the account as an FBAR each year and depending on the size of the account file extra forms with the IRS. At a minimum your IRS tax return schedule B part III should indicate that you have a financial interest in a foreign account.

With the UK financial accounts I have signature authority over I have been required to complete and sent to them a W9 (it’s all part of FATCA)

ETA
Many financial bodies don’t allow USCs as this is the cheapest way for them to comply with FATCA. For example, if your parents’ account is with Vanguard UK, they don’t allow USCs

As you have LPA Property & Financial Affairs, (you have signatory authority over, but no financial interest in any of your parents accounts - unless joint accounts of course.). So you need to add those accounts to your FinCEN 114 (Part IV). You have no ownership, or any income tax element attributable to you as an individual, hence no need to report on your IRS return.

Jonathan, does your parent now lack capacity, meaning that you, (as you registered LPA with the OPG ) make decisions for your parent's best interest? It's important to remember that merely registering a LPA by the OPG, does not take effect until that person, (perant) does loose capacity. So, if he/she wants you to go to the bank and withdraw money, pay bills in a way you don't agree with, then you can not change this.

It's a critical position once that person has deemed to have lost capacity, for both Property & Financial Affairs &  Health & Welfare.

What is the status, as this could impact the investment company stance and a rebuttal?

Jonathan, does your parent now lack capacity, meaning that you, (as you registered LPA with the OPG ) make decisions for your parent's best interest? It's important to remember that merely registering a LPA by the OPG, does not take effect until that person, (perant) does loose capacity. So, if he/she wants you to go to the bank and withdraw money, pay bills in a way you don't agree with, then you can not change this.

It's a critical position once that person has deemed to have lost capacity, for both Property & Financial Affairs &  Health & Welfare.

What is the status, as this could impact the investment company stance and a rebuttal?

I'm far from an expert on this subject but it's possible for the financial power of attorney to be active before the person lacks capacity. It depends on the way it's written.

This is the guidance for England.

Property and financial affairs lasting power of attorney
Use this LPA to give an attorney the power to make decisions about money and property for you, for example:

managing a bank or building society account
paying bills
collecting benefits or a pension
selling your home
It can be used as soon as it’s registered, with your permission.

https://www.gov.uk/power-of-attorney

You can for example go to your fathers bank and transfer funds providing that he has agreed to this. You can’t do something against his will. Once capacity is lost, then you are in full control and act on his behalf. Acting with care and consideration, making sound investments and not gambling with his money for example.

I'm far from an expert on this subject but it's possible for the financial power of attorney to be active before the person lacks capacity. It depends on the way it's written.

This is the guidance for England.
https://www.gov.uk/power-of-attorney

This is true. It takes months to establish a POA in England which we did this year and our son holds the documents he needs but he won’t execute either the financial or health POA until we give permission or are incapacitated.

Once the LPA is registered with the OPG, it is of course active as I mentioned earlier. You can do all sorts of financial dealings, BUT, the donor MUST agree to what you propose. You can only make decisions without the donors agreement, once capacity is lost. Health and Welfare LPA is different though and can only be used once capacity is deemed lost. So you can't be forced to take a Covid shot -  but when capacity is lost then it's up to the attorney.

durhamlad. -  Your son can register the LPA with your bank and anywhere else that YOU choose. He can't go against your wishes until you have lost mental capacity, (hopefully never). The LPA should be looked upon as making life easier for those with physical disabilities that simply can't leave the house easily to undertake financial dealings.

People in their 20 register LPA's. All perfectly healthy, but consider catastrophic events that could, heaven forbid, leave them without mental capacity. High risk occupations, or hobbies where there is a real danger. Sometimes newly weds decide on this LPA course, as part of long term planning. Clearly, the attorneys not looking to sell the donors home under them; as soon as the registration is complete. There are protections in place, with a third party notification of change.

Failure to make an LPA(s), but then to ultimately need them, can cause a real headache with the Court of Protection.

Prices are about £100 per LPA and easy enough for DIY. If you get something wrong, then they'll fire it right back to you. At least you know it's all in place, (unlike a DIY Will Kit) and ready for something; we all hope will never happen... 

Once the LPA is registered with the OPG, it is of course active as I mentioned earlier. You can do all sorts of financial dealings, BUT, the donor MUST agree to what you propose. You can only make decisions without the donors agreement, once capacity is lost. Health and Welfare LPA is different though and can only be used once capacity is deemed lost. So you can't be forced to take a Covid shot -  but when capacity is lost then it's up to the attorney.

durhamlad. -  Your son can register the LPA with your bank and anywhere else that YOU choose. He can't go against your wishes until you have lost mental capacity, (hopefully never). The LPA should be looked upon as making life easier for those with physical disabilities that simply can't leave the house easily to undertake financial dealings.

People in their 20 register LPA's. All perfectly healthy, but consider catastrophic events that could, heaven forbid, leave them without mental capacity. High risk occupations, or hobbies where there is a real danger. Sometimes newly weds decide on this LPA course, as part of long term planning. Clearly, the attorneys not looking to sell the donors home under them; as soon as the registration is complete. There are protections in place, with a third party notification of change.

Failure to make an LPA(s), but then to ultimately need them, can cause a real headache with the Court of Protection.

Prices are about £100 per LPA and easy enough for DIY. If you get something wrong, then they'll fire it right back to you. At least you know it's all in place, (unlike a DIY Will Kit) and ready for something; we all hope will never happen...

Thanks for this. Although our son is a UK/USC  I’m assuming that until he registers the LPA with our bank he won’t have to report anything on an FBAR since he doesn’t have signature authority  yet, and hopefully never. We set up the PoAs now as we know folks who didn’t have them registered when they really needed them and it takes months to get one registered.

Yes, LPA's are taking a very long time these days, Covid backlogs ect. Until your son physically has signatory authority over, but no financial interest in you account(s), then there is nothing to report. This falls in with the OP question and investment company wanting IRS reporting. If the OP had actual signatory authority now, then yes FBAR. If no, then obviously there is no account to report until a future event takes place and the signed documentation is formally held by the company.