Seeking advice re. what to do with proceeds from house sale

20191001

** this post has been edited for clarity after some of the answers, as it wasn't very clear initially **

Hi,

• We are Powers of Attorney for a relative who is in care. Unfortunately the relative does not have mental capacity and as attorneys it's our duty to make sure that investments are secure and benefit the estate so that care needs can be met for the foreseeable future.
• Aside from any issues relating to care costs, we are in the position of having accepted an offer on the house that the relative owns, and would like to ask for people's advice about options for the best way to handle the proceeds of the sale.
• There is enough money to cover care costs for a good while whilst some money remains to invest.
• Our initial thoughts are that the "best" thing to do with the surplus money might be to invest in property in order to generate income from rent.
• We don't want to put it into stocks and shares due to the risk of doing so as the relative's own small share portfolio has gone down in value by 25% since the Covid crisis, and there have been various articles talking about potential economic upheaval with the Brexit uncertainty
• Our understanding is that we would be unwise to put the money into bank accounts, as per this advice on moneysupermarket:

Under the FSCS the first £85,000 (as of January 2017) of your savings (or £170,000 if your money is held in a joint account) is protected in the event that the bank or building society goes bust. This threshold is the same as the €100,000 compensation offered to savers with European banks.
Remember that the £85,000 limit applies per institution and not per account. That means if you have, for example, £50,000 in an easy access account and £50,000 in a fixed rate bond, both held with the same bank, you’d stand to lose £15,000 in the event that the bank went bust, because you’d only be compensated for a total of £85,000.
If, therefore, you have substantial savings, you should make sure that you don’t hold more than the maximum £85,000 with any one bank.

• We are aware that at some point we need to be prepared to pay inheritance tax on the estate but doctors have said it is very hard to know whether that will be in a matter of months or years.
  
• Aside from investing in property / stocks and shares, are there any other options available to us?

It was pointed out by some of the forumites below that it sounded like we were talking about the money as if it was ours. We are very much aware that it is not ours - as attorneys we are not able to get any benefits or payment for doing this, and are just trying to do what our relative has been saying for years that they intended to do with their estate, which was to pass on as much as possible to the beneficiaries they had named in the will after enjoying a comfortable life ;-)

Any advice would be much appreciated.

Thanks

Socajam

Are you saying that you are selling this relative's house and then you would like to invest in another property?
I doubt as POA, you have the authority to use the money this way, but others will correct me.
You could put as much money as you want in NS&I and it will be protected - Direct Saver, Income Bonds, Premium Bonds etc.

20191001

Socajam said:

Are you saying that you are selling this relative's house and then you would like to invest in another property?
I doubt as POA, you have the authority to use the money this way, but others will correct me.
You could put as much money as you want in NS&I and it will be protected - Direct Saver, Income Bonds, Premium Bonds etc.

Hi - thanks for your reply.
The advice on the gov.uk website (Investing for someone as their attorney or deputy) states:

Investments are things you buy or put your money into to get a profit, such as:

• shares – you buy a stake in a company

• cash – you save money in a bank or building society account

• property – you invest in a physical building, whether commercial or residential

• items – you buy things like gold, artwork, or cars

• fixed interest securities (also called bonds) – you loan your money to a company or government

You can invest directly (for example in shares) or indirectly through an investment fund.

From reading that, it seems to be saying that a property could be purchased.

I think that means it is okay to invest in property?

Thanks again

SFindlay

20191001 said:

Hi,

• We are Powers of Attorney for a relative who is in care.
• Aside from any issues relating to care costs, we are in the position of having accepted an offer on the house that the relative owns, and would like to ask for people's advice about options for the best way to handle the proceeds of the sale.
• Our initial thoughts are that the "best" thing to do with the money is to invest in property.
• We don't want to put it into stocks and shares due to the risk of doing so.
• Our understanding is that we would be unwise to put the money into bank accounts, as per this advice on moneysupermarket:

Under the FSCS the first £85,000 (as of January 2017) of your savings (or £170,000 if your money is held in a joint account) is protected in the event that the bank or building society goes bust. This threshold is the same as the €100,000 compensation offered to savers with European banks.
Remember that the £85,000 limit applies per institution and not per account. That means if you have, for example, £50,000 in an easy access account and £50,000 in a fixed rate bond, both held with the same bank, you’d stand to lose £15,000 in the event that the bank went bust, because you’d only be compensated for a total of £85,000.
If, therefore, you have substantial savings, you should make sure that you don’t hold more than the maximum £85,000 with any one bank.

• We are aware that at some point we need to be prepared to pay inheritance tax on the estate but doctors have said it is very hard to know whether that will be in a matter of months or years.
  
• Aside from investing in property / stocks and shares, are there any other options available to us?

Any advice would be much appreciated.

Thanks

Slightly confusing post to.me, you are saying you are POA however talking like the money is yours?? 
If money is still relatives and will be used for their care home expenses then it needs to be readily available not tied up in property therefore should be held in a suitable institution to be accessible. 
Why do you think moneysupermarket is saying its unwise to hold the money in banks?? As long as the institutions are different then you're relative is covered for 85k in EVERY one of those institutions so just have the money.split between them. 

catscaroline

I think this is on topic: I have recently inherited 160k from a relative who left a house to me, the house sold and I have 160k as a result, the problem is I am 70, happy in my own home, don't wish to move, have no desire to own a buy to let, don't want to put the money into long term savings accounts and I have no need for expensive luxuries, I have no desire for more travel in my life and can't drive anymore due to eysight issues. I have put the money into the best easy access accounts as advised on this site (max 85k of course).  My problem is I feel silly having 160k which I feel I just can't do anything with, I have no relatives so intend leaving it all to charity. Most people think I am crazy, but the truth is I have no need for money at all.

20191001

SFindlay said:

Slightly confusing post to.me, you are saying you are POA however talking like the money is yours?? 
If money is still relatives and will be used for their care home expenses then it needs to be readily available not tied up in property therefore should be held in a suitable institution to be accessible.  

Thanks for your reply. We are keeping enough money aside to pay care fees, the property sold was in London so fetched a relatively high price compared with homes up north where we are based! Our relative is very well cared for but even setting aside money that is accessible for care needs there is also money to invest. Our relative also has some shares (not a huge portfolio by any means but just a few companies with personal significance) and they have lost over 25% of their value recently hence why we are cautious. Our idea was that if we did buy property, it would be rented out to provide an income longer-term.

20191001

catscaroline said:

I think this is on topic: I have recently inherited 160k from a relative who left a house to me, the house sold and I have 160k as a result, the problem is I am 70, happy in my own home, don't wish to move, have no desire to own a buy to let, don't want to put the money into long term savings accounts and I have no need for expensive luxuries, I have no desire for more travel in my life and can't drive anymore due to eysight issues. I have put the money into the best easy access accounts as advised on this site (max 85k of course).  My problem is I feel silly having 160k which I feel I just can't do anything with, I have no relatives so intend leaving it all to charity. Most people think I am crazy, but the truth is I have no need for money at all.

It sounds like you are very well balanced and some charity/charities will be very fortunate to be your beneficiary - and I'm sure they will be very grateful!

Linton

As PoAs you only have authority to act in the donors interests.  You have no authority to act in your or future beneficiaries interests. How is buying a property in the donor's interest?
The standard location for lump sums like this is NS&I where there is an unlimited guarantee directly from the government. Given the apparent low-ish life expectancy this would be perfectly appropriate. Generally people do not live long in care, apart from any specific life-limiting conditions your relative may have.

20191001

OK - thanks very much for all your advice which has been really helpful.

george4064

Just stick it in NS&I. Dont touch any property, bonds or share investments.

20191001

OK - thanks. I just wanted to share this which was in the Telegraph a few years ago. 
https://www.telegraph.co.uk/money/ask-a-money-expert/can-buy-buy-to-let-mums-money-generate-income-pay-care/
It does appear that it's legal to do this!
I do appreciate all the advice about NS&I etc and thanks for all the advice confirming what we already thought re shares and bonds!