How to manage mums funds
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The statistics say the average length of stay in care is around 2 years, but you'd obviously hope for that to be longer or for your Mum to move out if her circumstances change. Only 25% of people stay longer than 4 years. This might be worth reading.
https://killik-documents.s3.amazonaws.com/website2016/seq671_killik_cost_of_carereport_1014.pdf
The average lifespan for a woman aged 85 in the UK is 92, so you should have the difficult conversation with your Mum's doctor about her prognosis so you can be sensible with your planning. I would look at an enhanced annuity and compare the cost and insurance value with a simple savings bond ladder where you'll get 1% or 2%. If it costs 100k to get that 20k pa for life and her doctor is optimistic about her prognosis it might be a good solution and you can make up for any inflation out of the 500k left which I would put in a savings bond ladder. But 600k getting 1% would fund a withdrawal of 20k for 7 years until the balance dropped to 500k.
Both an annuity and a savings bond ladder will ensure your Mum's expenses are paid, but you have the difficult task of working out which is more sensible in the circumstances.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Your post which mentions a sibling (and suggests that there may be more). If you are all named equally on the POA (and perhaps also, in due course, become executors?), then it really is important that everyone agrees on the course of action and if there are any doubts on this, then I would suggest getting an IFA to act as an unbiased third-party. It could save you all manner of grief down the line.0
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Based on the new information provided by the OP I would say it is essential he sees an IFA, gets quotes for an impaired life annuity and discusses how best to invest any surplus capital.
Given the sums involved and the OP's description of his mum's health, there seems to be a very low risk of the money running out if she self-insures, and a very high risk of the capital being lost to the insurer if she buys a care annuity. But that is not something to take advice on from random people down the pub.I suspect many 'investors' in PBs will get annual returns a lot less than the average.
Most investors in PBs will get annual returns less than the average, it's the reason a few investors can get a lot lot more than the average.What about an investment bond in trust. Wide range of funds available, avoid probate, withdraw up to 5% without paying tax, very little paperwork, wide range of trusts available, just watch the IFA charges.
Attorneys cannot make gifts (including to a trust) so that is a total non-starter, leaving aside the tax, cost and investment risk issues.0 -
Getting everyone involved to agree on a course of action is important and that obviously includes your Mum, if at all possible, even though you have PoA. If you feel you need some one time advice from an IFA then go ahead. But make it fixed fee and don't get sucked into ongoing charges. Personally, I would be pretty conservative with your Mum's estate because the last thing you want is for it's value to fall by 20% or even 50% and endanger your Mum's financial security.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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Attorneys cannot make gifts
This is not the case.
https://www.blakemorgan.co.uk/news-events/blog/making-gifts-under-power-attorney/0 -
Very true, I should have added "non-customary" or "except in limited circumstances" or similar. But no matter how you word it, giving the donor's funds to a trust is a non-starter.0
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bostonerimus wrote: »Getting everyone involved to agree on a course of action is important and that obviously includes your Mum, if at all possible, even though you have PoA. If you feel you need some one time advice from an IFA then go ahead. But make it fixed fee and don't get sucked into ongoing charges.
If the OP's mum's life expectancy is lower than average then ongoing charges may be better value than an upfront fee.
If she lives for a number of years then the attorneys must review her finances regularly to stay on top of her cashflow position, take account of rising care fees etc, and ongoing work should be paid for by an ongoing charge.0 -
Malthusian wrote: »If the OP's mum's life expectancy is lower than average then ongoing charges may be better value than an upfront fee.
If she lives for a number of years then the attorneys must review her finances regularly to stay on top of her cashflow position, take account of rising care fees etc, and ongoing work should be paid for by an ongoing charge.
I don't think the OP needs an IFA, he/she and the siblings should be able to deal with the finances once a plan is in place and I would either do an enhanced annuity or a simple NSI savings bond ladder.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
A relative has PoA for his relative who went into care (at the age of 91 )with heart failure, hypertension, severe arthritis, severe fluid retention etc ....still in the care home four years later.......
This made me laugh out loud 😉. It is so what Mum would want - she is riddled with various physical things and can’t deal with complicated decisions but she is thoroughly enjoying seeing her grandchildren grow up and I’m sure she has her 90s in her sights. A determined lady.
Thank you ALL for your suggestions.i am pretty clear that we should
1. Put her excess funds into NS&I as a stopgap. Possibly £50k I premium bonds. She would enjoy a win! And it’s not a bad place to wait to see if interest rates improve.
2..check what’s on offer as annuity
3. Check instant/quick access-best interest rates and transfer in without long tie ins to be free to transfer when/if rates rise - can’t be far off, surely? ( views welcome)
4. Find an IFA that offers sensibly priced advice for her - pretty uncomplicated imho - situation. The only complication as I see it is in the unknowns of life expectancy and potential for increased care costs/interest changes and inflation. So as attorneys we can only take advice and make our best guess.
FYI on the sibling front, there are a lot of us but we (and our partners) have a pretty united view that we put mum’s interests first. Everyone is working and while I’m sure we could all find a use for an inheritance (someone suggested it would be naive not to take account of that and if would always have been in the mixfor Mum and dad who each had something from their own parents) it’s not top priority for any of us . We just emptied and sold the family home with no fall-outs and I don’t anticipate anything but amicable rowing in future. It’s how we were raised 😉
Thanks for all your contributions. Any views on waiting for interest rates to rise?I have borrowed from my future self
The banks are not our friends0
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