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Advice on how to invest Mums house proceeds to finance care home costs
steve32_2
Posts: 2 Newbie
Hi,
I would appreciate advice on the following:
We are currently in the process of selling my monther's house to finance care home costs. The current monthly cost of the care home is that we will need to finance is around £800 per month (£9,600 p.a.)
We are hoping to realise a profit of £120,000 on the house sale. Our idea is to deposit an immediate £10,000 to finance the first year's cost and invest the remaining £110,000 in a high interest account and use the interest earned to contribute to the monthly costs in the following year and thereafter.
I know the interest will not cover the full care home costs but we are trying to choose the best option that will slow down the fall in the value of the initial investment as much as possible.
Could anyone please give us some advice on the best way to proceed or indeed their thoughts on our current plans.
Thank you,
Steve32
I would appreciate advice on the following:
We are currently in the process of selling my monther's house to finance care home costs. The current monthly cost of the care home is that we will need to finance is around £800 per month (£9,600 p.a.)
We are hoping to realise a profit of £120,000 on the house sale. Our idea is to deposit an immediate £10,000 to finance the first year's cost and invest the remaining £110,000 in a high interest account and use the interest earned to contribute to the monthly costs in the following year and thereafter.
I know the interest will not cover the full care home costs but we are trying to choose the best option that will slow down the fall in the value of the initial investment as much as possible.
Could anyone please give us some advice on the best way to proceed or indeed their thoughts on our current plans.
Thank you,
Steve32
0
Comments
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Our idea is to deposit an immediate £10,000 to finance the first year's cost and invest the remaining £110,000 in a high interest account
Steve.
Sorry for your problem. But, off the top, that plan doesn't sound good. It's a specialist area and you need specialist advice .... I doubt very much they would go with your initial thoughts on simply using savings accounts. You need to be thinking about care fee plans / annuity (whole or partial ... depending on life expectancy etc etc)
It's not really 'forum' material. Do a bit of research on the 'net (exactly what I was doing this time last year) .... but a glance at this thread may be a good starter :-
http://forums.moneysavingexpert.com/showthread.html?t=421973&highlight=care+home
.... to convince you need an expert?If you want to test the depth of the water .........don't use both feet !0 -
Here is a link to specialist advice site for care home financing. Dependant on age and health an annuity may be the answer but obviously once this is purchased the capital sum cannot be recovered.
www.nhfa.co.uk
Please bear in mind that once your mother's savings reduce to £21500 then the council will have to pay the care home fees up to their standard funding assessment (less the contribution of your Mother's income minus a standard weekly 'pocket money' of £20.45).
The standard funding assessment is one of 4 levels dependant on the assessed care need. If this funding level is less than the care home fees your mother is paying then the council will ask the family to make a 3rd party top-up. If the family is unable or unwilling to top-up the fees then the council can move your mother to a care home which is willing to provide the care at the standard level if one can be found. If one cannot be found then the council have to pay the fees to the current payment level less your mother's contribution from income.
It is worth checking that your mother is in receipt of all benefits to which she is entitled. The main one to consider in her situation is attendance allowance which is not means tested and is paid in one of two levels the higher being £64.50 weekly. It is also worth reviewing other benefits periodically as your mother may become entitled to income support at a higher level of savings than the £21500.
A good source of information on these matters is www.counselandcare.org.uk0 -
Thank you for your feedback.0
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I wonder what care home your mum is in at a cost of just £800 per month? Typical costs are more like £800 per week these days!0
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I agree. I have just had a client needing £2500 a month and that is just the shortfall. Its a about £3600 in total.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Depending on your mother's age and health, the annuity will almost certainly be your answer.
We went down this route when the house was sold and NHFA were excellent.
Her remaining capital (ie the majority of it) is remaining stable - increasing if anything - and day-to-day income and expenses balance out well.
It took a lot of pressure off the relatives (mainly me) to know that she's never going to run out of money.0
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