Investing Elderly Aunt's money ???

Kelvin_Hall

Hi All,


I wonder if you can give me some advice ?


This is uncomfortable to write as I suppose I am asking about potentially end of life circumstances but it's something that has to be dealt with.



My 88yr old aunt has had to move to a nursing home and will not be going home, so we have just sold her house for her. Her care home fees are being met by a policy which she prudently took out earlier in life for exactly this possibility, plus her pension, so she has no need for the forseeable future, to draw on the capital from her house's sale. Between the house and some other saving she had she has a total of around £250,000 now sitting in standard bank accounts.


My sister has power of attorney and we are wondering what the most prudent thing to do with that money is. Realistically we can't think of any future use she will have for it, so it will probably become the major part of her estate eventually.



I don't know if it's relevant but I should probably say she has no children of her own and my sisters and I will be beneficiaries of her estate. Although she is now in a home, thankfully, she is fairly physically healthy and there in no immediate prospect of anything sombre happening.


We have, delicately, raised the idea of her divesting some of her money now but she was not open to the idea and it was a very awkward conversation.


She has always been a very prudent person, so would only want low risk investments.



Should we put her money in bank savings accounts, ISAs, National Savings Bonds, share based investments, other things ?


If we put it into fixed term based plans like National Savings, what would happen if something sombre did happen during the term ? Could they be kept on by her heirs or would they have to be cancelled ?


Thanks for any advice or ideas.

El_Torro

Is your aunt still mentally capable? Can she not make this decision for herself? Sure, your sister has power of attorney but this only applies if your aunt no longer has the mental capacity to decide what to do with the money.

Kelvin_Hall wrote: »

She has always been a very prudent person, so would only want low risk investments.

This seems to be an important point. I would discount anything that involves potential loss of capital, especially because of your aunt's age. So as you say, savings accounts and other bank accounts seems to be the way to go.


As you probably already know, the money needs to be invested / saved in your aunt's best interest, so anything volatile is best avoided.

Linton

If you have PoA for a donor you must act in their best interest. If the Attorney is also a beneficiary they should therefore be particularly careful. It is difficult to see how "divesting" aunty's assets could be in her best interest. However if she still has the mental capability to make financial decisions then of course she could agree if she wanted. However she should not be placed under any pressure. If she lacks capability the law becomes much more prescriptive.


As she has no obvious need to take any risk with the money I suggest the best option is to put it all in National Savings where she will get interest that is modest but higher than banks deposit accounts and more importantly is 100% guaranteed by the government.



If you want to do anything more than this which involves any risk I suggest that you take professional advice - not only must you act prudently, for your own protection you should be seen as acting prudently. Of course you must involve her in the decision if she is capable.

Alexland

As POA your sister should act in the aunt's best interests so the most important thing is that the money is safe and available if required. Don't worry too much about trying to maximize the outcome for beneficiaries as frankly the interest rate is a secondary concern.

I would suggest picking an easy access NS&I savings product to get full protection on a large sum. However if you do go for a fixed term NS&I bond for the higher interest rate (on some or all of the money) then the early withdrawal penalty is 90 days interest.


Alex

Keep_pedalling

Sounds like she has all her mental faculties intact and knows what she wants, so forget investing any of it. Depending on how much hassle you want you can put some of it in high interest accounts, but for the bulk I would put it in the safest place possible which is NS&I.

Kelvin_Hall

Thanks all. She isn't really mentally capable unfortunately, as in, she has no interest in the details of what happens to her money but is happy it's there. We only want to act in her best interest and are clear that that is part of the PoA, but thought that maybe that leaving the money in low interest accounts could actually be perceived of as being negligent with her money.


We had thought National Savings would be best but were unsure of whether we were missing something as we have no experience of sums as large as this.

MallyGirl

being safe cannot be deemed negligent.
NSI is certainly the easiest option as they do not have the £85k protection limit that the other financial institutions do.

Mojisola

Keep_pedalling wrote: »

Sounds like she has all her mental faculties intact and knows what she wants, so forget investing any of it. Depending on how much hassle you want you can put some of it in high interest accounts, but for the bulk I would put it in the safest place possible which is NS&I.

Kelvin_Hall wrote: »

We had thought National Savings would be best but were unsure of whether we were missing something as we have no experience of sums as large as this.

Apart from keeping her money safe, when the inevitable happens, it makes things much easier if there aren't lots of accounts to close.

I rationalised all my Dad's money into a couple of places in his last year and it made things much less stressful - dealing with difficult company employees when you're trying to grieve isn't a good way to spend your time.

Alexland

Kelvin_Hall wrote: »

but thought that maybe that leaving the money in low interest accounts could actually be perceived of as being negligent with her money.

It's not negligent but entirely sensible and suitable and the rate of return is fair for the current savings market. There's nothing saying as POA you have to get the absolute optimal return especially if it means putting it into unsuitable products with restricted access, capital loss risk, etc.

NS&I seems ideal for your purpose.

Alex

Kelvin_Hall

Alexland wrote: »

It's not negligent but entirely sensible and suitable and the rate of return is fair for the current savings market.

NS&I seems ideal for your purpose.

Alex

I'm off to investigate NS&I.


Thanks for all the advice.

Primrose

I agree with all the previous suggestion of going for the safest option but given your aunt has no need of the money to pay for her care accommodation are there any things which a small proportion of her savings might be spent or to enhance her quality of life if she is physically capable of participating ?

It's not much fun to be stuck in a care home and become nstitutionalised. Is she the sort of person who would enjoy being taken out on occasional outings to National Garden Schemes, National Trust properties, garden centres with afternoon tea cafes?, using a small fraction of her savings to pay a responsible person to take her out occasionally on such visits would, in my view, be a perfectly acceptable way of using her hard earned savings to enhance whatever life she has left, unless you or your sister of course are able to do this for her free of charge.