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    • Dansmam
    • By Dansmam 10th Oct 17, 7:48 AM
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    Dansmam
    How to manage mums funds
    • #1
    • 10th Oct 17, 7:48 AM
    How to manage mums funds 10th Oct 17 at 7:48 AM
    We need to decide on a strategy for managing money (under power of attorney) for Mum who is living in a care home now. Combined savings and house sale leave her just under £600k. She needs £2k per month, after pensions and other income, to cover the care home fees so Iím hoping you good people can give us some pointers on best places to put her funds.
    About £40k left in ISA (old account at rubbish rate) rest is in current account after house sale and I believe we have 2 months protection left while we split it across institutions etc.
    Need to get a move on and put it to work as safely as we can. Sheís always put us first - canít let her down now.
    Help!
Page 1
    • enthusiasticsaver
    • By enthusiasticsaver 10th Oct 17, 8:06 AM
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    enthusiasticsaver
    • #2
    • 10th Oct 17, 8:06 AM
    • #2
    • 10th Oct 17, 8:06 AM
    I personally would invest a proportion of it and keep a few years shortfall in national savings. Transfer cash isa to stocks and shares isa. For that amount you may need an IFA if you don't want to do the research yourself as it is quite time consuming if you new to investing.
    2 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Keep pedalling
    • By Keep pedalling 10th Oct 17, 8:43 AM
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    Keep pedalling
    • #3
    • 10th Oct 17, 8:43 AM
    • #3
    • 10th Oct 17, 8:43 AM
    Your mother is in the fortunate position that she can comfortably be able to fund her care comfortably for the rest of her life. Now is not the time for long term investments, your duty as her attorneys is to manage that money for her benefit alone, so safely should be your top priority.

    By all means take advantage of the best interest rates you can get, but put the rest into the safest home possible which is NS&I.
    • Linton
    • By Linton 10th Oct 17, 8:45 AM
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    Linton
    • #4
    • 10th Oct 17, 8:45 AM
    • #4
    • 10th Oct 17, 8:45 AM
    If you are legally responsible for looking after £600K of someone else's money and don't have the necessary skills/experience In my view you should either keep it in cash for the short term in NS&I or use an IFA to invest it for the longer term. This is for your protection as much as hers. If there is a major fall in share prices you need to be seen to have acted sensibly.
    • Zanderman
    • By Zanderman 10th Oct 17, 10:13 AM
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    Zanderman
    • #5
    • 10th Oct 17, 10:13 AM
    • #5
    • 10th Oct 17, 10:13 AM
    Agree entirely with Keep pedalling's and Linton's comments above - with PoA you must look after the money in an appropriate and responsible way.

    Investing in the conventional sense risks the capital and is generally only good sense long-term. You shouldn't risk the capital and, frankly, if your mother is elderly, you're not planning long-term.

    So keep it all safe - which means in banks and/or NS&I.
    • xylophone
    • By xylophone 10th Oct 17, 10:25 AM
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    xylophone
    • #6
    • 10th Oct 17, 10:25 AM
    • #6
    • 10th Oct 17, 10:25 AM
    http://forums.moneysavingexpert.com/showthread.php?t=5214897

    Post 3 may be of interest if you are considering an immediate needs annuity - I think that Just Retirement has merged with Partnership so providers now down to two.
    • chiang mai
    • By chiang mai 10th Oct 17, 11:46 AM
    • 88 Posts
    • 17 Thanks
    chiang mai
    • #7
    • 10th Oct 17, 11:46 AM
    • #7
    • 10th Oct 17, 11:46 AM
    I think I might be tempted to take out an annuity to cover the monthly expense amount. I'd then bank the maximum allowed under current bank account indemnity laws in two or three accounts that pay the highest possible interest - the bulk of the funds however I would place in the safest possible home I could find, probably NS&I.
    • LHW99
    • By LHW99 10th Oct 17, 2:32 PM
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    LHW99
    • #8
    • 10th Oct 17, 2:32 PM
    • #8
    • 10th Oct 17, 2:32 PM
    If you feel you need help in deciding the way forward, an IFA who is also a member of SOLLA would be able to advise on immediate care needs annuities as well as other aspects
    https://societyoflaterlifeadvisers.co.uk/

    Have you checked she is getting the correct rate of Attendance Allowance?
    • bostonerimus
    • By bostonerimus 10th Oct 17, 3:45 PM
    • 1,214 Posts
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    bostonerimus
    • #9
    • 10th Oct 17, 3:45 PM
    • #9
    • 10th Oct 17, 3:45 PM
    How old is you Mum and how is her health?

    To fully cover your Mum's care and expenses you probably don't need to take risks. So I would avoid equities and I'd also probably also avoid annuity product as they'd immediately reduce the capital for inheritance. I'd look at a savings bond ladder of maybe 5 years duration using something like National Savings bonds or a Gilt and high quality corporate short term bond portfolio if you want a bit more return....at the cost of a little more risk.

    Have you double checked your Mum's estate's inheritance tax situation to make sure there'll be no IHT to pay.
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 10th Oct 17, 4:38 PM
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    Linton
    How old is you Mum and how is her health?

    To fully cover your Mum's care and expenses you probably don't need to take risks. So I would avoid equities and I'd also probably also avoid annuity product as they'd immediately reduce the capital for inheritance. I'd look at a savings bond ladder of maybe 5 years duration using something like National Savings bonds or a Gilt and high quality corporate short term bond portfolio if you want a bit more return....at the cost of a little more risk.

    Have you double checked your Mum's estate's inheritance tax situation to make sure there'll be no IHT to pay.
    Originally posted by bostonerimus
    The rules of Power of Attorney require that the attorney must always act in the best interests of the donor. Minimising IHT and maximising inheritance are not valid reasons for making an investment decision under PoA. An annuity could well be in the interests of the donor if there was any doubt as to whether the capital would last out. It could of course incidentally help the eventual beneficiaries by limiting the risk that all the money would be used up.
    • Malthusian
    • By Malthusian 10th Oct 17, 5:12 PM
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    Malthusian
    Attorneys have the same legal duty as trustees - i.e. to manage the donor's assets as a prudent person of business would.

    If you're asking this question on Internet forums, you should be taking independent advice from an IFA who is a member of SOLLA. As said above this is for your protection as much as hers.

    The above advice to stick it all in cash is poor. No information is given about the donor's age or state of health so - while it is true that the average stay in a care home is about two years - it is too much of a leap to assume her life expectancy is limited. She could be a physically healthy 60 or 70-something who happens to needs some help and she could require care for many years. There is not nearly enough information to say that the attorneys should stick it all in cash.

    The attorneys would potentially be in trouble if she ran out of money - which is not impossible if she lives for many years, given care fees rise by more than inflation and her costs may increase as she needs more care - and had to leave the care home due to their decision to stick it under the mattress.
    • bostonerimus
    • By bostonerimus 10th Oct 17, 5:27 PM
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    bostonerimus
    The rules of Power of Attorney require that the attorney must always act in the best interests of the donor. Minimising IHT and maximising inheritance are not valid reasons for making an investment decision under PoA. An annuity could well be in the interests of the donor if there was any doubt as to whether the capital would last out. It could of course incidentally help the eventual beneficiaries by limiting the risk that all the money would be used up.
    Originally posted by Linton
    I asked about the health and age of the Mum to try to see if an annuity is appropriate. I mentioned the cost of the annuity as it would be naive to imagine that this does not cross the mind of a child with PoA. If the Mum is 70 and in reasonable health then an annuity might be appropriate..........85 and in failing health then not so much.
    Last edited by bostonerimus; 10-10-2017 at 5:31 PM.
    Misanthrope in search of similar for mutual loathing
    • Dansmam
    • By Dansmam 10th Oct 17, 7:21 PM
    • 535 Posts
    • 1,818 Thanks
    Dansmam
    Thanks for all your helpful comments. I shall certainly be taking professional advice - thanks for the links - but you’ve raised a few things I’d not thought of - annuity for one. As Mum is mid 80s and being treated for a number of nasties it may not be the best option but I’ll check out what might be out there . She has attendance allowance and some kind of nhs contribution coming in and IHT shouldn’t be an issue as dads allowance carries forward.
    One sibling is keen on us putting a bit in premium bonds. Any views?!
    Bit of a difference of opinion on here about cash.
    • Zanderman
    • By Zanderman 10th Oct 17, 8:39 PM
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    Zanderman
    Bit of a difference of opinion on here about cash.
    Originally posted by Dansmam
    Differing opinions are always good for thinking options through!

    Malthusian's point about all cash being inappropriate was, I think, primarily related to the possibility of your Mum being not yet very elderly with significant longevity still. In which case longer term investments might make sense.

    Your new info that she's mid-80s with problems would still suggest to me that a primarily cash option would be sensible.

    Whatever you do do take proper advice

    As for Premium Bonds, you'll find varyig opinions on those too. My own view is that the NS&I savings accounts are a better option as you know what you'll get. With PBs you don't - it could be a windfall or it could be nothing. The average returns you see quoted are just that, average. You may not get anything like that. But at least you preserve the capital.
    • Audaxer
    • By Audaxer 10th Oct 17, 8:43 PM
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    Audaxer
    As your mum is in her mid-80s I wouldn't think to invest in stocks and shares would be in her best interests. I would think NS&I and/or savings accounts which have the best interest rates, not putting more than the FSCS limit (which I think is £85k) in any one bank. I wouldn't think Premium Bonds are in her best interests. However I agree it may be best to get professional advice from an IFA.
    • xylophone
    • By xylophone 10th Oct 17, 8:46 PM
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    xylophone
    Your new info that she's mid-80s with problems would still suggest to me that a primarily cash option would be sensible.
    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.......
    • Keep pedalling
    • By Keep pedalling 10th Oct 17, 9:31 PM
    • 4,072 Posts
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    Keep pedalling
    As your mum is in her mid-80s I wouldn't think to invest in stocks and shares would be in her best interests. I would think NS&I and/or savings accounts which have the best interest rates, not putting more than the FSCS limit (which I think is £85k) in any one bank. I wouldn't think Premium Bonds are in her best interests. However I agree it may be best to get professional advice from an IFA.
    Originally posted by Audaxer
    Premium bonds are a safe haven and on average return 1.15% in income, so there could be worse places to put it. If the OPs mum is still with it mentally she might also enjoy being told about her latest win on Ernie.
    • Audaxer
    • By Audaxer 10th Oct 17, 9:42 PM
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    Audaxer
    Premium bonds are a safe haven and on average return 1.15% in income, so there could be worse places to put it. If the OPs mum is still with it mentally she might also enjoy being told about her latest win on Ernie.
    Originally posted by Keep pedalling
    While the 1.15% figure is overall average figure which will include all the big wins in the calculation, I held Premium Bonds for 10 years and got nowhere near 1.15% in annual winnings. I suspect many 'investors' in PBs will get annual returns a lot less than the average.
    • Linton
    • By Linton 10th Oct 17, 9:46 PM
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    Linton
    Thanks for all your helpful comments. I shall certainly be taking professional advice - thanks for the links - but youíve raised a few things Iíd not thought of - annuity for one. As Mum is mid 80s and being treated for a number of nasties it may not be the best option but Iíll check out what might be out there . She has attendance allowance and some kind of nhs contribution coming in and IHT shouldnít be an issue as dads allowance carries forward.
    One sibling is keen on us putting a bit in premium bonds. Any views?!
    Bit of a difference of opinion on here about cash.
    Originally posted by Dansmam
    The circumstances you describe may actually make an annuity a viable option. If the medical view is that her life expectancy is seriously impaired the annuity rate would take this into account and provide good protection should the medical view prove to be wrong. But you need professional advice.
    • Linton
    • By Linton 10th Oct 17, 9:49 PM
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    Linton
    Premium bonds are limited to £50k per person so if mum has £600k they really are pretty irrelevant either way.
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