Premium bonds with grandfather's money

mistertea

Not sure if this is the right board, but hoping for some advice please.

Mother has POA for grandfather who has dementia and is in a care home. Grandfather’s property sale completed recently and mother is looking at investment options for grandfather’s combined funds of close to £1m. Mother has refused to use a IFA due to cost.

Mother has suggested transferring to me and my brother £50K each to be held in Premium Bonds in our own names with an agreement that any winnings would be paid to grandfather. This is because grandfather is already at the £50K PB limit. Mother says there would be a legal document drafted by a solicitor to ensure this is all above board, but I’m skeptical as to whether that could be possible. Does anyone know if this definitely is or is not allowed?

eskbanker

While the short answer to your question is that there probably wouldn't be anything legal preventing drawing up some sort of agreement like that to transfer any PB winnings, IMHO it's unlikely to be compliant with her duties as POA for her to essentially gift some of his money to others even if income arising was to be paid back.

If she's already contemplating using a solicitor then that would probably be a sensible route to get familiar with her rights and obligations under the POA process, but to ignore IFAs on cost grounds is frankly bizarre when dealing with a £1m pot....

Even if the PB wheeze had been a flier, what would she have planned with the other £900K?

mistertea

Thanks eskbanker, I am going to try to steer my mother down the IFA route. She is currently opening various savings accounts for grandfather to distribute the money. I know she's done a bit of research around government backed limits of £85K etc.but she is essentially an amateur and I fear she is making her role as complex as possible in order to occupy herself in retirement.

eskbanker

Spreading money around a bunch of savings accounts in his name is a much better idea than the PB one, although it obviously needs a fair bit of effort to set them all up!

In the normal course of events it doesn't make much sense to hold so much cash, and investing would deliver better returns, but in the context of someone elderly with dementia in a home then unfortunately that does affect the wisdom of long-term investing.

Having said that, £1m would presumably pay for many years of care so an IFA may be able to come up with better options than simply saving the lot, so IMHO it would still be worth at least an introductory conversation with one or more, which will usually be free....

xylophone

Your mother cannot use your grandfather's money in this way - to do so would put her in breach of her duty as PoA.

Has your mother considered an immediate needs annuity?

https://www.moneyadviceservice.org.uk/en/articles/immediate-needs-annuity

She would require specialist advice - there are now only two providers of this product.

https://www.justadviser.com/products/care-funding/what-is-an-immediate-or-deferred-care-plan/

http://www.aviva-for-advisers.co.uk/adviser/site/public/products/retirement-solutions/lifetime-care/immediate-lifetime-care

She will be able to open savings account in her father's own name as his attorney - the various providers will advise their requirements on request.

Flugelhorn

rather than assorted accounts @ 85K each, how about looking at NS&I direct savings account as this has unlimited protection - though whether you can open one as an attorney, I am not sure

xylophone

though whether you can open one as an attorney, I am not sure

Yes it is possible - my relative has opened NS&I accounts as Attorney for his relative.

mistertea

Thanks for the further suggestions.

NS&I direct saver looks attractive from a simplicity standpoint. I suppose Mother could only push back on the 1% variable taxable rate, but I will argue that the simplicity justifies the "cost" of a lower return.

Immediate Needs Annuity is one I will suggest she seeks a quote on in case there are benefits in grandfather's situation.

Either way, I have declined the PB's in my name suggestion and told mother and brother that this would likely get her (or all of us) in trouble.