Investing for an 82-year-old with dementia

andymoosh

Hi there, I'm trying to work out the best course of financial action for my father who is 82 has dementia and may need care in the next few years. He has 275K in the bank (after the sale of his house) and an annual pension of 14K. His outgoings are approximately 22K (including rent). Residential care in his region is approximately 46K a year and home support about 20 an hour. At present he seems incredibly active and lives five minutes from my sister. We want to keep this independence for as long as possible. However, although my sister is doing a fantastic job of keeping an eye on dad — she is allergic to financial planning — and I've lived abroad for 25 years. The result? We don't really don't know where to start. Should we simply be cautious and split the money into cash and savings bonds with easy access or consult a financial advisor for other options? Your experience and advice would be hugely appreciated. Thanks

Sea_Shell

Do you (both) have Power of Attorney for his finances?

andymoosh

Hey there, yes we do both have POA

frogeyesimon

I took my elderly, but completely compus-mentis, mother to see an IFA some years ago as all of her savings were in cash (and had been for many years), as I (and she) wondered whether she could do a bit better. The IFA was reluctant to suggest anything much other than that she should continue to chase interest rates as she had been doing for the past decades.



A person with POA is supposed to act in the best interest of the donor, so does that mean that the attorney should be looking to achieve the maximum return on investment or should they simply be acting in a way that is consistent with the manner in which the donor has chosen to invest in the past? When I have asked this question in the past I have recieved mixed answers. I chose to do the latter for my father, and will probably do the same for my mother (if and when the time comes).


I expect that others will chime in here with some other views.

Linton

"Acting in the best interest of the donor" means taking full account of risk. So I would rule out any investment, since your father has sufficient assets to last a reasonable number of years and his need for care fees would be likely to occur in too short a time for investments. It would appear the downside for him losing money could be serious and the upside of extra wealth would not make much difference to his quality of life. Whether its in the interests of future beneficiaries is totally irrelevent and must not be considered with a POA.



The best you could do I believe is to use fixed term deposit accounts for some of his money . Perhaps set up a ladder - enough cash for the next year or two and then divide the rest perhaps into 1 year, 2 year, and 3 year fixed term accounts. Each year some of the unused cash can be put into a new 3 year account.


If he had been an experienced investor with a reasonable portfolio of shares and funds you may be justified in keeping some or all of it but in this case it seems clear that going into investments would be wrong.


PS if despite his dementia he could understand the situation you should discuss it with him. With PoA it is important to keep the donor in the loop as far as possible.

andymoosh

You're absolutely right. I never knew anything about my father's affairs and I don't think he was super financially literate. Still, I feel obliged to check out what other options are available, even if like you, we stay with simple savings. Thanks for your thoughts

andymoosh

Linton thank you! I've just got off the phone with a rather wonderful Which? magazine advisor who said the same thing.

kidmugsy

I too think he should stay in cash or cash-equivalent. But the urgent matter to deal with is the security of that £275k. If it is literally in one bank then the FSCS covers him for only the first £85k. So he must spread it between banks/BSs with different banking licenses, and/or move much of it to ns&i which enjoys a Treasury guarantee which would cover the lot.