Aging relative - pension, ISA, investment advice please

Scale_Rule

My aunt, who we look after, has in the last 18 months taken it upon herself to sort out a new will, arrange a funeral and nominate myself as PoA. All good and very sensible.:)

The other day she gave me a couple of carrier bags full of correspondence to sort out and look after. This process has revealed that she is sitting on a number of investments / asset management products (BNY Mellon, Aberdeen, Schroeder, Jupiter) and a few cash ISAs. These add up to a rather substantial amount, in excess of £100K. As far as I can tell, and I am no expert, any profits are instantly ploughed back into the funds and the ISAs are making about 2%.

She has a very healthy bank balance and a few pensions that pay about the same in every month to her current account as goes out.

So this makes me think a few things, and I would be happy for any advice.

What is currently the point of the investments, ISAs etc other than to pay out to the estate on her passing? Will they pay to the estate? How can we find out? Would she be better consolidating the lot in to a couple of simple ISAs for example to make the process of estate distribution easier when the time comes?

Thanks for any advice.

dunstonh

What is currently the point of the investments, ISAs etc other than to pay out to the estate on her passing?

That is for her to decide. Maybe she isnt ready to give it away. Maybe it is rainy day money. Maybe there isnt an IHT issue to worry about.

Will they pay to the estate?

Whether they pay out inside or outside of the estate or at all will depend on what they are.

How can we find out?

Research and analysis on a DIY basis or an adviser if you dont want to DIY.

Would she be better consolidating the lot in to a couple of simple ISAs for example to make the process of estate distribution easier when the time comes?

What is your definition of a simple ISA?

xylophone

2% is about the best she will get on an instant access cash ISA at the moment.
http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

She has a very healthy bank balance

Is her current account the most suitable for her needs?

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

Does she wish to consider any savings accounts? Again, interest rates are not brilliant but every little helps! Has she used her cash ISA allowance for this year?

As far as I can tell, and I am no expert, any profits are instantly ploughed back into the funds

She almost certainly holds accumulation units.

http://monevator.com/income-units-versus-accumulation-units-difference/

Are her tax affairs in order?

What is currently the point of the investments, ISAs etc other than to pay out to the estate on her passing? Will they pay to the estate? How can we find out? Would she be better consolidating the lot in to a couple of simple ISAs for example to make the process of estate distribution easier when the time comes?

http://www.hmrc.gov.uk/inheritancetax/

If your aunt were to die tomorrow, her executor would have regard to her will - after the payment of any IHT and obtaining of probate, it would be up to him to distribute the assets, either as cash ( cash isas, current and savings accounts, proceeds of sale of shares etc) or in specie (stocks and shares/funds).

Does your aunt own her own home? Is she a widow?

https://www.gov.uk/power-of-attorney/overview This is worth a read if you have not seen it before.

Have you registered the POA (s) so that you are now able to use them?

Scale_Rule

dunstonh wrote: »

That is for her to decide. Maybe she isnt ready to give it away. Maybe it is rainy day money. Maybe there isnt an IHT issue to worry about.

Whether they pay out inside or outside of the estate or at all will depend on what they are.



Research and analysis on a DIY basis or an adviser if you dont want to DIY.



What is your definition of a simple ISA?

I'm not suggesting she wants to give it away. More is it the best place for the money to be?

I have no definition, perhaps in my naivety I saw cash in an ISA as easier to sort out when the time comes than shares in a fund.

Thanks.

Scale_Rule

Thanks xylophone.

I'll look in to the current account. However I expect she wont have the will to change now.

I believe her tax is in order. Lloyds have always done her tax return and the current tax code seems correct.

She owns her home and is indeed widowed. Does this make any odds?

The POA is set up and in place. As yet we have not felt the need to invoke it, thankfully the mind is still strong.

dunstonh

I'm not suggesting she wants to give it away. More is it the best place for the money to be?

Gifting is part of estate planning. So, if your review is to include estate planning, then it needs to be considered.

I have no definition, perhaps in my naivety I saw cash in an ISA as easier to sort out when the time comes than shares in a fund.

It makes little difference whether it is in investments or savings. Some investments actually may be quicker depending on the tax wrapper.

How old is your aunt?

bigadaj

First thing to do is discuss her savings and investments and ask her what she wants to do with it, spending some while she can still enjoy it would be a good idea in my opinion.

Once the objectives are determined you can look at what is the best place for the money, investments have done far better than cash over teh last few years and are generally considered to do so in the longer term.

Scale_Rule

dunstonh wrote: »

Gifting is part of estate planning. So, if your review is to include estate planning, then it needs to be considered.



It makes little difference whether it is in investments or savings. Some investments actually may be quicker depending on the tax wrapper.

How old is your aunt?

86, mind still there, body not so great.

xylophone

She owns her home and is indeed widowed. Does this make any odds?

It matters from the point of view of assessing any IHT liability.

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

Linton

I would be wary of investing for two reasons and suggest that simple bank deposit accounts should be the default even though returns may be poor.

1) As PoA your responsibility is to act in her best interest. It is not clear to me that an investment portfolio with a 5-year plus outlook would be in her best interest.

2) Some old people can become easily stressed at things that wouldnt concern them when they were younger. A drop in investment value could cause such stress when, given her wealth, it would seem not to be necessary.

xylophone

body not so great.

http://www.ageuk.org.uk/money-matters/claiming-benefits/attendance-allowance/
Should it be/become relevant to your aunt.