£25,000 in cash - what to do?

handyandy1

I hope this is the correct category for this query, mods please move if inappropriate.

My elderly partially blind and disabled mother recently informed me that she had a "bit of money" accumulated from her disability benefit and pension, (she is pretty much housebound and therefore unable to go out and spend anything).
It turns out to be nearly £26,000. Clearly this amount of cash stored at home is worrying, for obvious reasons so I have persuaded her that it ought to be put in the bank. There is plenty of advice on this site regarding isa's and savings accounts, but we are concerned that depositing that amount in cash may have legal or tax implications or may affect her future benefit claims.
Can anyone offer any advice?
Thanks in anticipation

opinions4u

I'd ask the benefits question on the benefits board. It will affect certain benefits, but not others.

Depositing the cash may raise a question or two from bank staff complying with money laundering procedures - I'd just tell them the truth.

Tax wise, any interest earned on the savings will be subject to tax. £26k at 3% would be £780 a year interest so a tax bill of £156 (deducted from the interest) for a 20% taxpayer. If she's registered blind she should qualify for an additional tax allowance though. Make sure she gets it!

You've rightly identified cash ISAs as a way to mitigate this - she can save just short of £11k either side of the end of the tax year on 5th April and put the interest beyond the reach of the taxman.

I would also look very closely at what her needs are. Assuming the money is rightfully hers (and there are no benefits that should be repaid) are there things that could be provided to make her life easier around the house? Is it worth paying for carer or cleaner or gardener etc?

Are there any repairs or modifications that could be made to her home?

Does the council or other charities locally provide any services to get her out of the house and socialising? It might mean paying a tenner a week, but why shouldn't she?

Does she want to give any of the money away to relatives or charity? Google depravation of assets first, but modest gifts shouldn't cause any major problems.

Is it worth opening a joint account with her to make managing the money easier?

atush

I think your biggest problem in having this money (in cash or in the bank makes no difference) is that if she is on means tested benefits then she will have benefits to repay as her savings are I assume well over the limit.

I agree with ISAs to reduce tax, and I agree that some of the capital should be spent on making her life easier thru home modifications, transport etc. Although I remember that I teid to get my elderly MIL to use a taxi rather than bus to no avail.

I would have a long look at her situation and what she is getting in the way of benefits and if they are means tested. Also make sure that she is getting all she is entitled to. And do help her to spend the money on making her life easier and better. Going forwards, see that she spends rather than saves her money.

Yorkie1

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handyandy1

Thank you all for your prompt replies and suggestions, much food for thought :cool:

middlepuss

£25,000 in cash in the house sent a cold shiver down my spine. Get it into the bank very carefully - maybe you and another able-bodied family member go together - and do it now if you haven't done it already. Then worry about transferring it to ISAs or whatever.

EDIT: Or maybe three of you - one to drive you right up to the door of the bank and the other to ride shotgun as you cross the pavement!

MoneySaverLog

middlepuss wrote: »

one to drive you right up to the door of the bank and the other to ride shotgun as you cross the pavement!

Or get securicor in ;-)

Jake'sGran

handyandy1 wrote: »

Thank you all for your prompt replies and suggestions, much food for thought :cool:

I just thought I'd mention that I have rather more than your
Mum but not in the house. The one benefit I get is attendence
allowance which does not need to be mentioned on tax returns

Over the years I have used all the schemes which allow tax free interest. My tax free pay is £10,000.00 for the year 2010-11

My state pension is only about £50 per week and my private one is £2000 a year.

My problem is that I cannot spend the money. I'd love a holiday in the sun but no one in the family is interested.

If your Mum does not want anything in particular the money should be put in a cash or stocks &shares ISA. If she is not very interested you could apply for power of attorney and sort
it out for her.

xylophone

http://www.direct.gov.uk/en/Governmentcitizensandrights/Mentalcapacityandthelaw/Makingarrangementsincaseyoulosementalcapacity/DG_185921
http://www.disabilityalliance.org/capital.htm
http://www.hmrc.gov.uk/incometax/blind-person-allow.htm
I think it might be a good idea to get power of attorney?
Does your mother have a bank account? It might be as well to take her and the money to the bank - you can explain what has happened. It is not uncommon for elderly people to hoard cash and I would be surprised if they had not come across a similar situation before.
You then need to check on her benefits situation and advise the authorities where necessary.

atush

Jake'sGran wrote: »

I just thought I'd mention that I have rather more than your
Mum but not in the house. The one benefit I get is attendence
allowance which does not need to be mentioned on tax returns

Over the years I have used all the schemes which allow tax free interest. My tax free pay is £10,000.00 for the year 2010-11

My state pension is only about £50 per week and my private one is £2000 a year.

My problem is that I cannot spend the money. I'd love a holiday in the sun but no one in the family is interested.

If your Mum does not want anything in particular the money should be put in a cash or stocks &shares ISA. If she is not very interested you could apply for power of attorney and sort
it out for her.

Jake's gran,

If Jake (or the rest of your ungrateful family) don't want to holiday with you (if you pay might help lol) then go on a cruise.

Lots of fum things to do, places to see, people to meet, and food to eat that you don't have to cook. I'd choose an non italian liner though ;-).

Of course this will mean you spend more on one (very enjoyable) holiday. You could even mention I am spending X K on a cruise because none of you want to do go tp ?Y with me!

Worth a punt perhaps?

When they realise you are soending your money they might like a slice lol.

Jake'sGran

I love them very much and yesterday it cheered me when I was talking to the youngest about things in general - and money - and I said "just think about the money you will get sometime he said
I don't think like that Gran. He was very sincere. I am so proud of him. All A's in his A levels, two of them starred. He won't need
money from me!

In any case I could no get insurance and I don't like very hot weather but they do.