Grandparent has a large amount of cash

Kfent111

The money was pretty much all my grandad's. Neither of them ever spoke of it and it's only since my grandad has passed that we've come to know about it. It's £25k. It was just in boxes hidden away in the house. Makes me feel sick thinking of the risk of burglary/fire!

The house is their own.

We've also thought about whether the notes are still legal tender. I haven't seen it myself so not sure.

I think the best thing is to just stick it all in her bank account and get some financial advice about how to get a decent return on it. But she worries that it's going to be eaten away by tax or possible future care fees.

Keep_pedalling

Unless her house is worth more than £625,000 then her estate is not going to be effected by IHT, so she should not worry about that

For a house owner having £25,000 in savings is useful to cover expenses that are bound to crop up over the years, so she should not give that away under any circumstances. This level of savings is not going to be eaten up by care costs as it is only just above the current maximum savings limit. If she ever has to move into residential care however the equity in the house will need to be used to fund that, but I would not worry her with that fact at the moment.

The one thing she should seriously consider is getting an LPA in place.

Kfent111

Thanks Keep Pedalling. We'll look into setting up an LPA.

What sort of issues might we run into if we deposit this money into an account? Would they just need copies of bank statements showing all the withdrawals over the years?

Kfent111

Ps, only the house equity is used to fund care fees? They don't also use your personal savings?

Keep_pedalling

Kfent111 wrote: »

Thanks Keep Pedalling. We'll look into setting up an LPA.

What sort of issues might we run into if we deposit this money into an account? Would they just need copies of bank statements showing all the withdrawals over the years?

You should not need to do that, but £25k in cash might ring alarm bells as far as money laundering is concerned. I would make an appointment to take your gran in to her bank to get the money safely deposited. Take a copy of the death certificate with you.

Keep_pedalling

Kfent111 wrote: »

Ps, only the house equity is used to fund care fees? They don't also use your personal savings?

A lot of care is provided in people's own homes, and where that is happening only savings over £23,250 is taken into account, the value of the house is ignored. If (and it is a big if) residential care is required and there is no partner or dependent living in the family home then all assets above £23.250 will be taken into account.

If your gran only has this £25k and is on limited income then it is likely that over time she will fall below the limit as she uses up funds to maintain her home.

Did you GF claim any means tested benefits?

Kfent111

I think they both just got state pension. I'm not sure if they received pension credits, but can check.

What effect would this have?

Keep_pedalling

Kfent111 wrote: »

I think they both just got state pension. I'm not sure if they received pension credits, but can check.

What effect would this have?

Pension credit is reduced if you have savings of over £10,000. For every £500 you have above that the amount of PC you get is reduced by £1 a week.

Andypandyboy

So, given that cash stash, it is possible that there has been an overpayment of pension credit.

Keep_pedalling

Andypandyboy wrote: »

So, given that cash stash, it is possible that there has been an overpayment of pension credit.

If PC was / is being claimed without declaring those savings the answer is yes.