Bereavement

egg93

Hi all,
Bit of Background: My dad recently passed away and left my mum (Housewife since early 80’s, 58) after his estate is settled with:

1) a life insurance policy and pension pot of approx. £600k
2) House worth approx. £220k ( She will look to downsize next year to something in the ball park of £140k as the current house is too big for what she wants)

Bit of Background on mum:

3) She has her own personal pension pot of approx. £20k
4) She has no debt (Everything getting paid off from my dad’s estate) and her year to year costs (gas, electrics, food etc.) are approx. £15k pa
5) She doesn’t have an ISA or anything like that. Literally just a current account and an easy access savings account. (My dad did the finances)

My intention is to go and see an independent financial advisor with my mum to discuss what steps she should be taking to give her a comfortable standard of living and to ensure that her money is giving her some sort of return.

I have a few questions as I don’t have any experience with this sort of thing.

1) The estate will not be completely settled until August. Despite this, the life insurance policy (£400k) has went straight into my mum’s savings account (Something to do with the way my dad had set it up) and I was wondering if I should see the financial advisor now or wait until the estate is completely settled before moving the money?
2) What would be the ball park figure for the financial advisor to set up some kind of pension scheme for my mum and would it even be worth it given her age i.e. no time to grow? Should she be looking to do something else with the money?
3) She has also been phoned by the bank’s private banking person who dealt with my dad. Would it be better to use the private banking people or an independent advisor?
4) Should she be setting anything up short term (pre - retirement) to boost her savings?

As the post above shows I am a bit lost and any advice would be great.

Thanks.

talexuser

You will get advice from more expert people here, but the first thing is do not go with the bank. They are invariably very expensive with very poor performing investment funds. Look up an independent financial adviser and try 2 or 3 interviews to see who you get on with.

Paul_1977

I am no expert either but I would make sure what she does with the funds you check it all first to make sure its all safe etc.

Linton

I think she should talk to an IFA now. Its going to take a little while to find someone she's happy to work with and for them (and perhaps her!) to understand her requirements and come up with a solution. As long as the IFA knows the extra money will turn up at some time he/she can include it in the proposal.

Dont talk to the bank.

A pension wouldnt be appropriate for most of the money - one is limited to contributions of one's earned income each year. The IFA will need to set something up that gives her sufficient secure income, sets up some long term investments, minimises tax and perhaps recognises that inheritance tax could be an issue in the long term.

In the short term it would be prudent to put the money somewhere protected. eg a National Savings direct saver account which will pay what is reasonable interest these days and is guaranteed by the government and has immediate access. She could have course leave a small cash sum to tide her over until her finances are properly sorted.

MarkBargain

Sorry for your loss.

I just posted to another thread:

"A good place to start would be a low-fee investment platform. I use Charles Stanley Direct for my shares ISA. You can buy whatever funds you want and charges are very low compared to buying the funds directly.

I wanted to avoid investment in weapons, tobacco etc so opted for five ethical funds investing in both the UK and worldwide to spread the risk. The best performer so far as been the L&G Ethical Trust Acc (the fees on that are only 0.31% a year). "

The funds marked Inc rather than Acc provide an income, so your Mum could invest in a range of those. Lots of funds would spread the risk.

Your Mum could also consider investing £10K in a 65+ Guaranteed Growth Bonds. The 3-year bond pays 4% interest.

She could also save £20K in Santander 123 accounts paying 3% interest, although that's a bank account so she'd have to transfer into and out of it each month and there is a £2 monthly fee, but there is cash back on bills.

CLAPTON

MarkBargain wrote: »

Sorry for your loss.

I just posted to another thread:

"A good place to start would be a low-fee investment platform. I use Charles Stanley Direct for my shares ISA. You can buy whatever funds you want and charges are very low compared to buying the funds directly.

I wanted to avoid investment in weapons, tobacco etc so opted for five ethical funds investing in both the UK and worldwide to spread the risk. The best performer so far as been the L&G Ethical Trust Acc (the fees on that are only 0.31% a year). "

The funds marked Inc rather than Acc provide an income, so your Mum could invest in a range of those. Lots of funds would spread the risk. £15K now and £15K next month (new tax year) could go into an ISA and the rest just investment funds on which she would pay tax on dividends.

Your Mum could also consider investing £10K in a 65+ Guaranteed Growth Bonds. The 3-year bond pays 4% interest.

She could also save £20K in Santander 123 accounts paying 3% interest, although that's a bank account so she'd have to transfer into and out of it each month and there is a £2 monthly fee, but there is cash back on bills.

no tax payable on dividends unless she is a higher rate tax payer

MarkBargain

CLAPTON wrote: »

no tax payable on dividends unless she is a higher rate tax payer

Thanks, post above amended.

egg93

Thanks for the feedback folks. This may be a stupid question but with regards to choosing a financial advisor are there any particular questions that I should be asking to establish if they are any good or not? (Aside from fees).

Thanks

xylophone

http://www.moneysavingexpert.com/savings/best-financial-advisers

http://www.money.co.uk/article/1005407-the-secret-to-finding-an-ifa-you-can-trust-with-your-money.htm

MarkBargain

I'd do as much reseach yourself if I were you, and there is a lot of great information on this site. Think about risk appetite, as shares and property would give the best returns probably, but cash investments (spread over different institutions so it is all protected) would be the safest option although probably with much lower returns.

If I were her I'd go for a wide mix of investments, avoiding fees, commissions and charges as much as possible.

One more thing - a friend of mine saw a financial advisor who wanted £3K in fees to invest in some funds. My friend got the same funds for no up front cost, and much lower annual charges. Careful who you listen to.

Aegis

egg93 wrote: »

I have a few questions as I don’t have any experience with this sort of thing.

1) The estate will not be completely settled until August. Despite this, the life insurance policy (£400k) has went straight into my mum’s savings account (Something to do with the way my dad had set it up) and I was wondering if I should see the financial advisor now or wait until the estate is completely settled before moving the money?

See an adviser now. It may well be that the pension scheme can be accessed now, as it's likely written under a trust arrangement and such schemes only require a death certificate to pass on. That said, we're current in a transitional period between two different death benefit regimes and it may be better to defer this until 6 April or better. Make sure that you find an adviser who is very familiar with the impending changes to death benefits and talk about this possibility.

It may also be worth discussing the wills to see if anything might be retrospectively adjusted for future tax efficiencies. This is likely to be much less important than sorting out the above.

The life assurance policy sounds like it was set up in trust - it might be worth looking at that to see what type of trust it was and whether it would be better in the long turn to retain the assets in the trust structure rather than in your mother's estate. It may of course be too late for that though!

2) What would be the ball park figure for the financial advisor to set up some kind of pension scheme for my mum and would it even be worth it given her age i.e. no time to grow? Should she be looking to do something else with the money?

It depends on what she needs and how this ties in with the rest of your requirements for advice.

3) She has also been phoned by the bank’s private banking person who dealt with my dad. Would it be better to use the private banking people or an independent advisor?

I'm highly biased, of course, but an independent adviser can invariably offer a much greater array of options than a bank adviser, and will often do so at lower cost.

4) Should she be setting anything up short term (pre - retirement) to boost her savings?

It's probably better to start sooner than later.