Power of Attorney: Managing Savings of Relative in Nursing Home

norsefox

Around 12 months ago my gran went into a nursing home. She is in her 80s. My mum is acting as her Power of Attorney.

My gran's house has now been sold. With the proceeds of this property, in addition to remaining savings, she has around £270k to her name.

The costs for the nursing home are approximately £660 per week. Her pensions (including state pension) are worth approximately £325 per week, making a shortfall of £335 per week, or around £17,500 per year.

With no interest gained on her savings, this would run out in 15.5 years (not accounting for inflation).

Immediate Steps:
The first aspect is to ensure no more than £85k is in any one bank to assure FSCS protection.

Further Steps:
What avenues are open for investing/savings to alleviate (as much as is sensibly possible) the erosion of capital from interest and bills over the years she has left in her life?

I presume (but stand to be corrected) that £20k could be invested in a Stocks and Shares ISA prior to April 2020, with a further £20k
added after this date. I presume there is no conflict here and that investing on my gran's behalf is still in her best interest, such that the risk is acceptable, and that the value (of her remaining savings/investments) doesn't put her close to making assets unavailable to pay her bills?

The remaining £230k (minus funds easily accessible to pay the monthly bills) would be in various savings accounts/NS&I to at least gain some continued interest.

(Also, I am unsure if this is the best forum so happy for it to be moved if appropriate).

pafpcg

Take a look at this thread for possibilities:
https://forums.moneysavingexpert.com/discussion/6085887/investment-of-care-home-savings

Attendance Allowance (£58 or 87pw) or an immediate needs annuity are worth investigating.

Linton

With PoA it is important that you act prudently and are seen to act prudently and not do anything much more risky than she would do herself. Investing £20K/year cautiously from a lump sum of £270K is unlikely to make a lot of difference anyway.

So I suggest you deposit an amount equal to the annual costs into a ladder of fixed rate savings accounts - 1 for 1 year, a second for 2 years up to a fifth for 5 years so a steady flow of income is guaranteed with the best interest rates available. However from what I have read elsewhere you may have problems opening a new account with PoA, especially if it is with a bank/building society she hasn't used before.

Another option you could take is to pay for professional advice on investment. This would help demonstrate that you are acting responsibly. However since she seems to have more than enough money to cover her likely lifespan one could argue that taking any risk at all is unjustified..

A final thing to consider is an immedate needs annuity. By paying a single lump sum now the necessary income would be guaranteed no matter how long she lived. Sounds good, but you will probably find that the cost is significantly more than would be needed to cover her normal life expectancy. Still, it could be justifiable.

Thrugelmir

norsefox wrote: »

With no interest gained on her savings, this would run out in 15.5 years (not accounting for inflation).

Then there seems little need to take excessive risk on your part.

norsefox

Thanks for your quick responses. The other thread notes an immediate needs annuity which might be worth looking at further - for the cost of ~£110,000 (give or take - subject to health and age) the shortfall of £17k per year might well be covered leaving the remaining capital not subject to the nursing home's bills.

It may well not be suitable, but worth investigating.