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  • FIRST POST
    • Dansmam
    • By Dansmam 10th Oct 17, 7:48 AM
    • 534Posts
    • 1,815Thanks
    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 2
    • grandst
    • By grandst 10th Oct 17, 10:48 PM
    • 36 Posts
    • 22 Thanks
    grandst
    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.
    • Keep pedalling
    • By Keep pedalling 10th Oct 17, 10:54 PM
    • 4,063 Posts
    • 4,429 Thanks
    Keep pedalling
    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.
    Originally posted by grandst
    That I think would be well beyond the remit of an attorney.
    • bostonerimus
    • By bostonerimus 11th Oct 17, 1:38 AM
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    bostonerimus
    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.
    Last edited by bostonerimus; 11-10-2017 at 3:57 AM.
    Misanthrope in search of similar for mutual loathing
    • Apodemus
    • By Apodemus 11th Oct 17, 7:15 AM
    • 958 Posts
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    Apodemus
    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.
    • Malthusian
    • By Malthusian 11th Oct 17, 9:21 AM
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    Malthusian
    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.
    Originally posted by Audaxer
    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.
    Originally posted by grandst
    Attorneys cannot make gifts (including to a trust) so that is a total non-starter, leaving aside the tax, cost and investment risk issues.
    • bostonerimus
    • By bostonerimus 11th Oct 17, 12:37 PM
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    bostonerimus
    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.
    Misanthrope in search of similar for mutual loathing
    • xylophone
    • By xylophone 11th Oct 17, 12:43 PM
    • 23,631 Posts
    • 13,759 Thanks
    xylophone
    Attorneys cannot make gifts
    This is not the case.


    https://www.blakemorgan.co.uk/news-events/blog/making-gifts-under-power-attorney/
    • Malthusian
    • By Malthusian 11th Oct 17, 2:24 PM
    • 3,433 Posts
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    Malthusian
    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.
    • Malthusian
    • By Malthusian 11th Oct 17, 2:28 PM
    • 3,433 Posts
    • 5,260 Thanks
    Malthusian
    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.
    Originally posted by bostonerimus
    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.
    • bostonerimus
    • By bostonerimus 11th Oct 17, 4:49 PM
    • 1,211 Posts
    • 668 Thanks
    bostonerimus
    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.
    Originally posted by Malthusian
    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.
    Last edited by bostonerimus; 11-10-2017 at 10:41 PM.
    Misanthrope in search of similar for mutual loathing
    • Dansmam
    • By Dansmam 12th Oct 17, 12:33 AM
    • 534 Posts
    • 1,815 Thanks
    Dansmam
    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.......
    Originally posted by xylophone
    This made me laugh out loud 😉. It is so what Mum would want - she is riddled with various physical things and canít deal with complicated decisions but she is thoroughly enjoying seeing her grandchildren grow up and Iím 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 itís not a bad place to wait to see if interest rates improve.
    2..check whatís 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 - canít 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 mumís interests first. Everyone is working and while Iím 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) itís not top priority for any of us . We just emptied and sold the family home with no fall-outs and I donít anticipate anything but amicable rowing in future. Itís how we were raised 😉
    Thanks for all your contributions. Any views on waiting for interest rates to rise?
    • bostonerimus
    • By bostonerimus 12th Oct 17, 2:19 AM
    • 1,211 Posts
    • 668 Thanks
    bostonerimus
    I think you need to have a frank discussion with her doctor as next of kin and get a handle on her prognosis. If there's a good change of your Mum seeing her 90s then the enhanced annuity might be worth considering and you can cover inflation from the rest of the estate. Watch out for IFA fees.
    Misanthrope in search of similar for mutual loathing
    • Malthusian
    • By Malthusian 12th Oct 17, 10:46 AM
    • 3,433 Posts
    • 5,260 Thanks
    Malthusian
    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.
    Originally posted by bostonerimus
    If you mean a care annuity then they can only be taken out with advice so your post is contradictory.

    Thanks for all your contributions. Any views on waiting for interest rates to rise?
    by Dansmam
    If we were having this conversation a few years earlier and you'd decided to wait for the inevitable interest rate rise, you'd spend seven years sitting on your hands.
    • xylophone
    • By xylophone 12th Oct 17, 11:31 AM
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    • 13,759 Thanks
    xylophone
    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.
    I spoke to relative who had just been to see his "determined lady" - (now almost stone deaf so he writes down his comments and questions...).

    She was telling him that she had just had her latest blood test - it seems that a low blood count can now be added to her list....but she soldiers on!

    SOLLA for adviser? https://societyoflaterlifeadvisers.co.uk/
    • Heedtheadvice
    • By Heedtheadvice 12th Oct 17, 12:02 PM
    • 636 Posts
    • 316 Thanks
    Heedtheadvice
    There have been plenty of posts advising getting independent advice. I can only reiterate that but would add getting it soon before you make any decisions as to where to put any cash!
    Premium Bonds (and other 'good' ideas) might not be legally appropriate.
    Remember with POA you have got to act in your mum's best interest. That might not be preservation of capital especially as has been written increased care costs and prospective longevity or if she need extra care later or a change of home.

    For harmony sibling agreement is good but who actually has POA? It is that/these person(s) who need to get advice and make the decisions. It could be that other siblings disagree but it is those with POA that have the responsibility and you then need to take the professional advice, not make what might seem sensible decisions straight away. Act on behalf of your mother and protect yourself.

    Not professional advice but I would keep money temp in a bank account(s), get the doctors opinions written(!), meet with a good IFA armed with all the information (get recommendations locally as to who to choose!) and then take that advice.

    Lots of good info and ideas on here but you have no idea those that are good and legal for the POA to implement! As Linton and others have said get professional advice.....and soon!
    Last edited by Heedtheadvice; 12-10-2017 at 12:05 PM. Reason: just a tad of correction of grammar mainly!
    • bostonerimus
    • By bostonerimus 12th Oct 17, 1:52 PM
    • 1,211 Posts
    • 668 Thanks
    bostonerimus
    If you mean a care annuity then they can only be taken out with advice so your post is contradictory.
    Originally posted by Malthusian
    I'd get quotes and compare costs and taxes. I'd try to avoid an IFA, but I understand that in the UK the market is arranged so that you have to go through them to get certain products. Whether an annuity (care or not) is appropriate is going to depend greatly on life expectancy.
    Misanthrope in search of similar for mutual loathing
    • enthusiasticsaver
    • By enthusiasticsaver 12th Oct 17, 2:08 PM
    • 4,827 Posts
    • 9,111 Thanks
    enthusiasticsaver
    This made me laugh out loud 😉. It is so what Mum would want - she is riddled with various physical things and canít deal with complicated decisions but she is thoroughly enjoying seeing her grandchildren grow up and Iím 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 itís not a bad place to wait to see if interest rates improve.
    2..check whatís 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 - canít 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 mumís interests first. Everyone is working and while Iím 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) itís not top priority for any of us . We just emptied and sold the family home with no fall-outs and I donít anticipate anything but amicable rowing in future. Itís how we were raised 😉
    Thanks for all your contributions. Any views on waiting for interest rates to rise?
    Originally posted by Dansmam
    Sounds like a good plan. Views on interest rises are mixed. I personally cannot see them rising much with the level of personal and government debt in this country particularly with stories coming out of recessions due to Brexit etc. I think we are stuck with low interest rates for some time - great for borrowers but lousy for savers.
    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
    • bostonerimus
    • By bostonerimus 12th Oct 17, 6:45 PM
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    • 668 Thanks
    bostonerimus
    Sounds like a good plan. Views on interest rises are mixed. I personally cannot see them rising much with the level of personal and government debt in this country particularly with stories coming out of recessions due to Brexit etc. I think we are stuck with low interest rates for some time - great for borrowers but lousy for savers.
    Originally posted by enthusiasticsaver
    In the OP's situation the value of the annuity is purely longevity insurance.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 12th Oct 17, 6:48 PM
    • 1,211 Posts
    • 668 Thanks
    bostonerimus
    There have been plenty of posts advising getting independent advice. I can only reiterate that but would add getting it soon before you make any decisions as to where to put any cash!
    Premium Bonds (and other 'good' ideas) might not be legally appropriate.
    Remember with POA you have got to act in your mum's best interest. That might not be preservation of capital especially as has been written increased care costs and prospective longevity or if she need extra care later or a change of home.
    Originally posted by Heedtheadvice
    There is more than enough money in the OP's mum's estate to cover the expenses given in the original post, even with inflation. I don't see any reason to risk the capital.
    Misanthrope in search of similar for mutual loathing
    • bigadaj
    • By bigadaj 13th Oct 17, 1:02 AM
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    bigadaj
    In the OP's situation the value of the annuity is purely longevity insurance.
    Originally posted by bostonerimus
    In what situation is it not?
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