I remember helping a family member exit an offshore investment bond. Some aspects of the product weren’t initially transparent:
- Up to 5% of the amount invested can be withdrawn each policy year without triggering a 'chargeable event'. Depending on fees, this typically works out to around 4–4.5%.
- If a chargeable event does occur, the income tax calculations can get quite messy. The use of multiple clusters and surrender value calculations isn’t particularly transparent.
- It’s the policyholder’s responsibility to report this to HMRC and pay any tax due. In some cases, you may end up overpaying and then have to wait for a refund.
I wouldn’t walk into this product willy-nilly, but it can be advantageous in specific circumstances.
Admit I've not looked at these bonds for some years, but I thought that the fund has to pay tax (a form of Corporation tax?) on the gain? So you are in effect paying basic rate income tax (on the gain) although it may not feel like it. Or has that now changed?
Nothing has changed & you are right (up to a point). The fund/policy pays 20% tax but is not deemed to be CGT.....more a withholding tax.
What @mendonca was describing is the tax that could be charged when the policy is cashed-in (in part or in full). This is know an a "chargeable event" and the life company (for it is actually a life assurance product) does a calculation as to how much "gain" has been made on the amount being taken out. As @mendonca says, these tax calculations can be messy & quite complicated, although the life company should be able to do them for you or there are online calculators (if you look hard enough) that can do them too.
However, if you are a basic rate taxpayer, or are one when the policy is cashed in, then you shouldn't need to worry as there is no tax to be paid.
I remember helping a family member exit an offshore investment bond. Some aspects of the product weren’t initially transparent:
- Up to 5% of the amount invested can be withdrawn each policy year without triggering a 'chargeable event'. Depending on fees, this typically works out to around 4–4.5%.
- If a chargeable event does occur, the income tax calculations can get quite messy. The use of multiple clusters and surrender value calculations isn’t particularly transparent.
- It’s the policyholder’s responsibility to report this to HMRC and pay any tax due. In some cases, you may end up overpaying and then have to wait for a refund.
I wouldn’t walk into this product willy-nilly, but it can be advantageous in specific circumstances.
Admit I've not looked at these bonds for some years, but I thought that the fund has to pay tax (a form of Corporation tax?) on the gain? So you are in effect paying basic rate income tax (on the gain) although it may not feel like it. Or has that now changed?
Nothing has changed & you are right (up to a point). The fund/policy pays 20% tax but is not deemed to be CGT.....more a withholding tax.
What @mendonca was describing is the tax that could be charged when the policy is cashed-in (in part or in full). This is know an a "chargeable event" and the life company (for it is actually a life assurance product) does a calculation as to how much "gain" has been made on the amount being taken out. As @mendonca says, these tax calculations can be messy & quite complicated, although the life company should be able to do them for you or there are online calculators (if you look hard enough) that can do them too.
However, if you are a basic rate taxpayer, or are one when the policy is cashed in, then you shouldn't need to worry as there is no tax to be paid.
So if you are a lower rate tax payer there really is no benefit (arguably a negative due to fee's), higher rate potentially but mainly if you start as a higher rate tax payer through the policy life and are a lower rate tax payer at the end.
I remember helping a family member exit an offshore investment bond. Some aspects of the product weren’t initially transparent:
- Up to 5% of the amount invested can be withdrawn each policy year without triggering a 'chargeable event'. Depending on fees, this typically works out to around 4–4.5%.
- If a chargeable event does occur, the income tax calculations can get quite messy. The use of multiple clusters and surrender value calculations isn’t particularly transparent.
- It’s the policyholder’s responsibility to report this to HMRC and pay any tax due. In some cases, you may end up overpaying and then have to wait for a refund.
I wouldn’t walk into this product willy-nilly, but it can be advantageous in specific circumstances.
Admit I've not looked at these bonds for some years, but I thought that the fund has to pay tax (a form of Corporation tax?) on the gain? So you are in effect paying basic rate income tax (on the gain) although it may not feel like it. Or has that now changed?
Nothing has changed & you are right (up to a point). The fund/policy pays 20% tax but is not deemed to be CGT.....more a withholding tax.
What @mendonca was describing is the tax that could be charged when the policy is cashed-in (in part or in full). This is know an a "chargeable event" and the life company (for it is actually a life assurance product) does a calculation as to how much "gain" has been made on the amount being taken out. As @mendonca says, these tax calculations can be messy & quite complicated, although the life company should be able to do them for you or there are online calculators (if you look hard enough) that can do them too.
However, if you are a basic rate taxpayer, or are one when the policy is cashed in, then you shouldn't need to worry as there is no tax to be paid.
So if you are a lower rate tax payer there really is no benefit (arguably a negative due to fee's), higher rate potentially but mainly if you start as a higher rate tax payer through the policy life and are a lower rate tax payer at the end.
Yes, like pensions, it will mainly benefit those who are higher rate taxpayers going in & basic rate taxpayers coming out.
However, Investment Bonds ARE good for lower rate, or even nil rate, taxpayers if their spouses are higher rate. Being able to put in £100k+ and withdraw 5%pa tax free is not generally available elsewhere......esp if you want to invest & not leave the money on deposit.
I caveat all this with the fact any investments should really only be undertaken once full financial advice has been sought. What is right for one person may not be right for someone else.
Anyway, enough of that. Anyone know when the Budget is ??? I can't believe we are into September & the Government still haven't announced the date yet. Are they frit 😂
Regarding Premium bonds. I have 22k in premium bonds.
2 years ago I won £1150 which I was quite happy with. Last year I won £475 this was a poor return and I considered transferring them to something else. But so far this year I have won.
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
Don't know your exact situation but have worked on equity release briefly in the past.
Does feel like your problem isn't with ER itself but with the way it was handled and lack of regualtion/poorly applied regulation.
In many cases ER is a really good way for older people to remain in their home, free up cash in order to live better in later life to cover costs of care etc. rather than a choice between living in poverty whilst sitting on a large illiquid asset or being forced to move somewhere cheaper to free up cash.
Obviously people being taken advantage of and being sold something when not being in circumstances where they actually need it, is a problem and should never happen. Need to ensure it can't happen. But there is a place for ER
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
Sorry to hear about your bad experience. When did your FiL enter into the Equity Release agreement? It is now (and has been for a while) a highly regulated area of finance with a huge focus on not taking advantage of vulnerable clients. It is (and should be) harder to get borrowing via ER than a standard mortgage (despite the lack of affordability calculations), with the costs and risks stressed to the applicant by the ER advisor as well as a separate Independent Legal Advisor. Advisors should also be exploring all other suitable alternatives before recommending ER - including utilising other assets or family help - as well as including the family in the conversations where possible.
Of course there will be bad advisors but that is true in all areas of finance, not just ER.
ER has a pretty bad reputation due to poor standards of regulation in the past and horror stories in the press, but in general the market is much better now and it is a great tool for older individuals who have limited income but valuable assets that they don't want to sell in order to utilise that value.
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
If your FiL was of sound mind and able to make financial decisions then there was no need to consult LPAs or the solicitor - LPAs exist for when the individual is unable to make health and/or financial decisions. My wife and I both have LPAs in place - mine has my wife and our two sons as attorneys, and my wife has me and our two sons. I'm still of sound mind (allegedly) and as long as that remains the case then my attorneys cannot override any decision I make, however financially unwise that might be. The problems occur when executors and beneficiaries of the will have to pick up the pieces. It seems in this case your FiL was at fault in not telling you, not the ER company.
They can be a nightmare though, I agree. When friends of ours passed away (rather the surviving souse passed away) their daughter had to pick up the pices. They had taken out two slugs of £50k several years before and the daughter had to try to sell the house quickly otherwise the ER comapny would reposses and only be bothered with getting their money back. As it was a £700k house had £200k left after the ER company had taken their slice.
ER can work if the individual for example has no heirs - it is rarely advisable if that is not then case and trading down to release equity or selling the property outright are invariably better options.
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
Sorry to hear about your bad experience. When did your FiL enter into the Equity Release agreement? It is now (and has been for a while) a highly regulated area of finance with a huge focus on not taking advantage of vulnerable clients. It is (and should be) harder to get borrowing via ER than a standard mortgage (despite the lack of affordability calculations), with the costs and risks stressed to the applicant by the ER advisor as well as a separate Independent Legal Advisor. Advisors should also be exploring all other suitable alternatives before recommending ER - including utilising other assets or family help - as well as including the family in the conversations where possible.
Of course there will be bad advisors but that is true in all areas of finance, not just ER.
ER has a pretty bad reputation due to poor standards of regulation in the past and horror stories in the press, but in general the market is much better now and it is a great tool for older individuals who have limited income but valuable assets that they don't want to sell in order to utilise that value.
This.
What is it you are unhappy with @usetobunkin ? Did your fil get scammed ? Did he not get the money he asked for ? I hate to say this......but are you just angry that your wife didn't inherit as much as she thought she would ? I'm not looking to start arguments but if you feel your fil was conned then you should make a complaint to the ER company and/or the FCA / FOS.
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
Sorry to hear about your bad experience. When did your FiL enter into the Equity Release agreement? It is now (and has been for a while) a highly regulated area of finance with a huge focus on not taking advantage of vulnerable clients. It is (and should be) harder to get borrowing via ER than a standard mortgage (despite the lack of affordability calculations), with the costs and risks stressed to the applicant by the ER advisor as well as a separate Independent Legal Advisor. Advisors should also be exploring all other suitable alternatives before recommending ER - including utilising other assets or family help - as well as including the family in the conversations where possible.
Of course there will be bad advisors but that is true in all areas of finance, not just ER.
ER has a pretty bad reputation due to poor standards of regulation in the past and horror stories in the press, but in general the market is much better now and it is a great tool for older individuals who have limited income but valuable assets that they don't want to sell in order to utilise that value.
This.
What is it you are unhappy with @usetobunkin ? Did your fil get scammed ? Did he not get the money he asked for ? I hate to say this......but are you just angry that your wife didn't inherit as much as she thought she would ? I'm not looking to start arguments but if you feel your fil was conned then you should make a complaint to the ER company and/or the FCA / FOS.
The ER. Was taken out 2017. We did make a formal complaint but everything was done according to the rules, However we felt that had the FA done proper due diligence, she should have consulted with the family. However she did not, had she we could have told her that we as the family were both able and willing to support our FiL. My FiL was completely sound and able to make his own decisions, but I don’t think he would have realised the fees he was signing up for. Also the financial company involved was lacking in any empathy when dealing with grieving relatives.
As for being angry about the loss of equity, no not really. The anger was because we felt that a FA had lined her pockets by charming an old man.
I the “fees” charged were little short of criminal.
I appreciate that advice has a cost, but the solicitor (recommended by the FA) was little short of a conman. But once again a complaint was rejected by the Solicitor Regulating Authority.
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
Sorry to hear about your bad experience. When did your FiL enter into the Equity Release agreement? It is now (and has been for a while) a highly regulated area of finance with a huge focus on not taking advantage of vulnerable clients. It is (and should be) harder to get borrowing via ER than a standard mortgage (despite the lack of affordability calculations), with the costs and risks stressed to the applicant by the ER advisor as well as a separate Independent Legal Advisor. Advisors should also be exploring all other suitable alternatives before recommending ER - including utilising other assets or family help - as well as including the family in the conversations where possible.
Of course there will be bad advisors but that is true in all areas of finance, not just ER.
ER has a pretty bad reputation due to poor standards of regulation in the past and horror stories in the press, but in general the market is much better now and it is a great tool for older individuals who have limited income but valuable assets that they don't want to sell in order to utilise that value.
This.
What is it you are unhappy with @usetobunkin ? Did your fil get scammed ? Did he not get the money he asked for ? I hate to say this......but are you just angry that your wife didn't inherit as much as she thought she would ? I'm not looking to start arguments but if you feel your fil was conned then you should make a complaint to the ER company and/or the FCA / FOS.
The ER. Was taken out 2017. We did make a formal complaint but everything was done according to the rules, However we felt that had the FA done proper due diligence, she should have consulted with the family. However she did not, had she we could have told her that we as the family were both able and willing to support our FiL. My FiL was completely sound and able to make his own decisions, but I don’t think he would have realised the fees he was signing up for. Also the financial company involved was lacking in any empathy when dealing with grieving relatives.
As for being angry about the loss of equity, no not really. The anger was because we felt that a FA had lined her pockets by charming an old man.
I the “fees” charged were little short of criminal.
I appreciate that advice has a cost, but the solicitor (recommended by the FA) was little short of a conman. But once again a complaint was rejected by the Solicitor Regulating Authority.
I'm.sorry to gear that. However, it does seem that your Fil was in sound mind and knew what he was doing.
Can I ask how your Fil came to do ER ? Did he seek it out or was he "approached" by the FA ? The FA should have asked if he wanted his family members involved/told what he was doing - that is certainly a requirement when I was involved in ER (I'm not anymore - not since 2021). Also, where I was concerned the only "fees" that I picked up was the commission paid by the ER company. I know some advisers do charge for advice in this area, but I think providers pay around 1-2% commission so I always found that was enough.
Was your FIL age 75 or over when he took out the ER? If so I believe he should have been offered the opportunity to speak with a relative. If he chose not to then it’s up to him.
Was your FIL age 75 or over when he took out the ER? If so I believe he should have been offered the opportunity to speak with a relative. If he chose not to then it’s up to him.
Problem is its he said/she said.....and as Fil has now passed away there wont be an answer to that one I'm afraid.
Was your FIL age 75 or over when he took out the ER? If so I believe he should have been offered the opportunity to speak with a relative. If he chose not to then it’s up to him.
Problem is its he said/she said.....and as Fil has now passed away there wont be an answer to that one I'm afraid.
It would be documented in the financial report, if the report was found.
ER , Equity Release is a real problem. I have posted on an adjacent thread and was advised to continue the debate on this thread.
ER, is in my opinion a scam that targets older and vulnerable people. Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
My wife had Power of Attorney for both health and financial. My FiL was not deluded but was taken advantage of by an unscrupulous FA. The family solicitor was bypassed and my wife and sister were bypassed. The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
The family could have covered the outstanding debts and expenses but of course we were unaware. When it came to light it was totally legal what had happened.
However we the family felt that it was immoral. The company involved parades as a paragon of virtue .
I put this out on CL to warn and advise and as always provoke discussion
Sorry to hear of the troubles, but just wanted to ask a few questions for clarity:
You say your wife had Power of Attorney for both Health and Financial, I assume by this you mean Lasting Power of Attorney?
Was the LPoA ever enacted? If it wasn't she had no power of attorney, in simple terms she had a piece of paper that stated if the time comes when your FiL was no longer able to make decisions for himself he wanted his daughter (plus anyone else named) to make those decisions.
I suspect that was the case here (based on the fact you state it was 'totally legal' what happened) and this is where I think there is often deep misunderstandings about what an LPoA actually is (I've known people believe that the second it is signed means they have PoA).
ER is a good product in the right circumstances. I assume he had good reason to take it out? (i.e. he didn't take it out and then simply bank the money, he used it?)
Comments
What @mendonca was describing is the tax that could be charged when the policy is cashed-in (in part or in full). This is know an a "chargeable event" and the life company (for it is actually a life assurance product) does a calculation as to how much "gain" has been made on the amount being taken out. As @mendonca says, these tax calculations can be messy & quite complicated, although the life company should be able to do them for you or there are online calculators (if you look hard enough) that can do them too.
However, if you are a basic rate taxpayer, or are one when the policy is cashed in, then you shouldn't need to worry as there is no tax to be paid.
So if you are a lower rate tax payer there really is no benefit (arguably a negative due to fee's), higher rate potentially but mainly if you start as a higher rate tax payer through the policy life and are a lower rate tax payer at the end.
However, Investment Bonds ARE good for lower rate, or even nil rate, taxpayers if their spouses are higher rate. Being able to put in £100k+ and withdraw 5%pa tax free is not generally available elsewhere......esp if you want to invest & not leave the money on deposit.
I caveat all this with the fact any investments should really only be undertaken once full financial advice has been sought. What is right for one person may not be right for someone else.
Anyway, enough of that. Anyone know when the Budget is ??? I can't believe we are into September & the Government still haven't announced the date yet. Are they frit 😂
I'm 57 (planning to retire around 63), additional rate tax payer. Portfolio is currently about 65/35 shares v bonds - so medium risk
Quite late really. Previous Autumn budgets have been late Oct / early November.
Just to recap my FiL entered into a ER.Scheme. His immediate family (my wife and her sister) were totally unaware what had occurred until he had passed.
The family solicitor was bypassed and my wife and sister were bypassed.
The house had a Charge against it, and the interest kept accruing every day. Even after my FiL had passed.
When it came to light it was totally legal what had happened.
The company involved parades as a paragon of virtue .
Does feel like your problem isn't with ER itself but with the way it was handled and lack of regualtion/poorly applied regulation.
In many cases ER is a really good way for older people to remain in their home, free up cash in order to live better in later life to cover costs of care etc. rather than a choice between living in poverty whilst sitting on a large illiquid asset or being forced to move somewhere cheaper to free up cash.
Obviously people being taken advantage of and being sold something when not being in circumstances where they actually need it, is a problem and should never happen. Need to ensure it can't happen. But there is a place for ER
Sorry to hear about your bad experience. When did your FiL enter into the Equity Release agreement? It is now (and has been for a while) a highly regulated area of finance with a huge focus on not taking advantage of vulnerable clients. It is (and should be) harder to get borrowing via ER than a standard mortgage (despite the lack of affordability calculations), with the costs and risks stressed to the applicant by the ER advisor as well as a separate Independent Legal Advisor. Advisors should also be exploring all other suitable alternatives before recommending ER - including utilising other assets or family help - as well as including the family in the conversations where possible.
Of course there will be bad advisors but that is true in all areas of finance, not just ER.
ER has a pretty bad reputation due to poor standards of regulation in the past and horror stories in the press, but in general the market is much better now and it is a great tool for older individuals who have limited income but valuable assets that they don't want to sell in order to utilise that value.
What is it you are unhappy with @usetobunkin ? Did your fil get scammed ? Did he not get the money he asked for ? I hate to say this......but are you just angry that your wife didn't inherit as much as she thought she would ? I'm not looking to start arguments but if you feel your fil was conned then you should make a complaint to the ER company and/or the FCA / FOS.
However we felt that had the FA done proper due diligence, she should have consulted with the family. However she did not, had she we could have told her that we as the family were both able and willing to support our FiL. My FiL was completely sound and able to make his own decisions, but I don’t think he would have realised the fees he was signing up for.
Also the financial company involved was lacking in any empathy when dealing with grieving relatives.
Can I ask how your Fil came to do ER ? Did he seek it out or was he "approached" by the FA ? The FA should have asked if he wanted his family members involved/told what he was doing - that is certainly a requirement when I was involved in ER (I'm not anymore - not since 2021). Also, where I was concerned the only "fees" that I picked up was the commission paid by the ER company. I know some advisers do charge for advice in this area, but I think providers pay around 1-2% commission so I always found that was enough.
If he chose not to then it’s up to him.
You say your wife had Power of Attorney for both Health and Financial, I assume by this you mean Lasting Power of Attorney?
Was the LPoA ever enacted? If it wasn't she had no power of attorney, in simple terms she had a piece of paper that stated if the time comes when your FiL was no longer able to make decisions for himself he wanted his daughter (plus anyone else named) to make those decisions.
I suspect that was the case here (based on the fact you state it was 'totally legal' what happened) and this is where I think there is often deep misunderstandings about what an LPoA actually is (I've known people believe that the second it is signed means they have PoA).
ER is a good product in the right circumstances. I assume he had good reason to take it out? (i.e. he didn't take it out and then simply bank the money, he used it?)