Investing money from sale of mum's house to pay for her care?

Linda-la

Our mum has just been admitted to residential care home and as she has a house, she will be expected to self-fund after the initial 3 month property disregard period. As we have Power of Attorney, we are considering the best way forward in terms of funding her stay and one option would be to sell the house and invest most of the proceeds into a fixed high interest savings account or bond, so that the interest earned on the capital would pay a hefty chunk of the care home fees.

The other alternative is to take the Deferred Payment option offered by the Council, whereby we rent her house out and use the rental income, plus her pension income to pay for about half of the care home fees, the rest being paid by the council, basically on loan against the value of the house at 1.85% interest p.a., plus an annual fee of £300 and £900 set-up charge.

We estimate that we will have about £380K to invest, having kept back a £50K slush fund. The care home charges nearly £4,000 per month.

Does anyone have any helpful advice about the best way to go? Particularly about any high interest savings accounts or bonds we should consider investing the money in? Pitfalls to be avoided? Any well-informed advice would be much appreciated. Thank you.

kidmugsy

A third possibility would be to sell the house and use the capital to buy an immediate needs annuity. How old is your mother?

xylophone

A third possibility would be to sell the house and use the capital to buy an immediate needs annuity.

You would need to consult an IFA - just three providers now I think,

Friends Life, Partnership and Just Retirement.

http://societyoflaterlifeadvisers.co.uk/

https://www.moneyadviceservice.org.uk/en/articles/immediate-need-care-fee-payment-plans

http://www.medicp.co.uk/DOc/Care%20Fee%20Payment%20Plan%20Questionnaire.pdf

Linda-la

Hi, mum is 85 and has quite advanced vascular dementia and is physically frail too.

xylophone

fixed high interest savings account or bond, so that the interest earned on the capital would pay a hefty chunk of the care home fees.

And where would you find one of these?

http://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

Remember that care home fees tend to increase well ahead of inflation.

A relative with PoA for his relative tells me that for the past couple of years the fees have increased by over three per cent and in his case the fees are over £5000 a month now.

Mojisola

Linda-la wrote: »

Hi, mum is 85 and has quite advanced vascular dementia and is physically frail too.

You usually have to fight very hard to get it but she may be entitled to NHS continuing healthcare funding -
https://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=2710

Linda-la

Hi, yes we are looking into the NHS Continuing Care funding but according to the Care Home Manager's experience, it's very unlikely she'll get it.

Linda-la

Thank you for the link. Well with those sorts of returns on savings accounts we're not going to earn much off her capital! The safest route is probably to rent it to the Council for Social Housing use - it's disabled access is pretty good. They guarantee income for it with no fees or dead periods. Feels a bit less final too!

Linda-la

Thank you to everyone for the advice and links. I'm kinda new to posting on internet forums and apologise for being a bit klutzy in formatting my replies to your posts. Thanks again.

AnotherJoe

Linda-la wrote: »

Thank you for the link. Well with those sorts of returns on savings accounts we're not going to earn much off her capital! The safest route is probably to rent it to the Council for Social Housing use - it's disabled access is pretty good. They guarantee income for it with no fees or dead periods. Feels a bit less final too!

That does sound like the best option all round, financially and otherwise, and if the disabled access means they put a disabled person in there you'd think the odds of it being better looked after are higher than if its a random set of renters.

Linda-la

if the disabled access means they put a disabled person in there you'd think the odds of it being better looked after are higher than if its a random set of renters.

One would hope so, but I wouldn't like to bet on it!