Savings advice for elderly parent (I'm POA)

Chris_Boris

Hi, I'm a new member having signed up in the hope I can pick your brains about savings.

I'm Power of Attorney for my father who is 80 and in poor health. Upon becoming POA I was reviewing his finances and found he had a fair chunk of cash sat in various Nationwide accounts. Long story short, I have maxed a cash ISA and Premium Bonds for him but he still has quite a large amount of cash sitting in one account (I checked all the interest rates and closed all the lowest ones transferring the cash into the highest paying account). 

He has two bonds that mature in the next 2 months (one with NS&I due on 14th Jan (12k) and one with Nationwide due mid Feb (51k)). Total cash will be roughly 130k when both bonds have matured. 

Please could you help give me some ideas what to do with this (sensible obviously!) I am not looking to take risks no am I looking to tie it up in any fixed term investment due to his poor health. I assume come April I'll open another cash ISA for him so that leaves 110k to worry about. It's all currently in one account so exceeds the 85k FSCS cover limit. 

He has no debts nor mortgage etc and has enough income to support his day to day life. 

Any and all help would be gratefully appreciated. 

Many thanks in advance
Chris

Linton

If the PBs are maxed out there is the NS&I Direct Saver account which is 100% guaranteed.   The interest would be minimal but safety is more important.  I cant see why you are so keen on cash ISAs in these circumstances.  Any tax on interest would be insignificant anyway so is the extra hassle worth it?  Personally I would consider putting it all in NS&I.

I agree with you that taking any risk at all would be inappropriate given the circumstances and requirements from your role as POA.  

xylophone

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

bowlhead99

Linton said:

If the PBs are maxed out there is the NS&I Direct Saver account which is 100% guaranteed.   The interest would be minimal but safety is more important.  I cant see why you are so keen on cash ISAs in these circumstances.  Any tax on interest would be insignificant anyway so is the extra hassle worth it?  Personally I would consider putting it all in NS&I.

I agree with you that taking any risk at all would be inappropriate given the circumstances and requirements from your role as POA.  

I would agree with these comments and dumping everything in NS&I is a simple solution if you don't want the hassle of splitting the money and chasing highest rates. But note that the NS&I interest rates (other than the premium bonds) along with other instant access accounts interest rates are pretty low at the moment...

Although you don't want 'risk' and don't want a fixed term product due to poor health, he already has £50k of premium bonds which can be accessed with a few days notice, and £20k of cash ISA. He may be in poor health, but given he has enough income for his spending, is it reasonable to expect he would need access to more than that (£50k+20k= )£70k plus his ongoing pension income, over the course of the next year?  It would be worth considering putting at least some of it in a better paying instant access account, notice account or 1 year fixed account. As his attorney acting in his best interest, a reasonable person wouldn't think it risky to put £80k on a one year deposit (within FSCS limit) and earn 0.5-1% (£400-£800) if he already has tens of thousands on demand at NS&I in premium bonds or direct saver account or at other banks.

But if he's not in need of the extra income there is no shame in just plonking the lot into NS&I (other than it's not the most 'money saving expert' thing to do

Dazed_and_C0nfused

Does he have sufficient taxable income to make Cash ISA's useful?

He can probably have taxable income of £18,500 before any tax is payable on interest so something to think about.

ratechaser

Dazed_and_C0nfused said:

Does he have sufficient taxable income to make Cash ISA's useful?

He can probably have taxable income of £18,500 before any tax is payable on interest so something to think about.

Well right now I think you can get better rates on an instant access ISA than on an instant access taxable account - unusual situation, but certainly makes it a viable option again!

Chris_Boris

Thank you for your replies, it's appreciated. 

I'm not caught on a cash ISA in particular, I just thought that was the best way to get 20k invested and not have to worry about it. He should have had, in my opinion, more ISA accounts opened for previous tax years too but that ship has sailed so no point worrying about it. To me, the important thing was efficiently moving the eggs from the one basket and thus trying to ensure the maximum FSCS coverage should any institution suddenly fail. 

Good point about the cash already on demand covering any realistic requirements. I guess, for no good reason, I didn't want to tie the cash up in a fixed term investment due to his potentially passing away during that term. 

I'm by no means an expert on this kind of financial matter but do want to try and make sure his cash is doing the best job it can to grow while not worrying about it suddenly dramatically dropping in value. Saving rates are terrible at the moment with the only half decent returns being found on accounts with a maximum holding of 3k so that's not really much use in this situation

Linton

Chris_Boris said:

Thank you for your replies, it's appreciated. 

I'm not caught on a cash ISA in particular, I just thought that was the best way to get 20k invested and not have to worry about it. He should have had, in my opinion, more ISA accounts opened for previous tax years too but that ship has sailed so no point worrying about it. To me, the important thing was efficiently moving the eggs from the one basket and thus trying to ensure the maximum FSCS coverage should any institution suddenly fail. 

Good point about the cash already on demand covering any realistic requirements. I guess, for no good reason, I didn't want to tie the cash up in a fixed term investment due to his potentially passing away during that term. 

I'm by no means an expert on this kind of financial matter but do want to try and make sure his cash is doing the best job it can to grow while not worrying about it suddenly dramatically dropping in value. Saving rates are terrible at the moment with the only half decent returns being found on accounts with a maximum holding of 3k so that's not really much use in this situation

At current interest rates, I dont think you are going to make more than say 1% and that's with you tieing money up.  So that is £1300/year from £130K.  Is £1300/year extra income for what may be a small number of years going to make a noticeable difference to anyone or anything?

colsten

So far, the thread discusses how the old gent's money can be saved.

Can we now get some information about the gent's financial requirements, please. Given he is 80 and in poor health, could his life be enhanced by using some of the money to pay for improved care, and/or improved accommodation? If so, that is what should probably happen. If all this is in hand already, decisions about the best savings account(s) may be the right next steps - although I would be tempted to seek the advice of an IFA, who can provide personalised advice (inheritance planning etc), rather than rely on the opinions of a bunch of strangers on the internet who know nothing about the gent's requirements.

Chris_Boris

colsten said:

So far, the thread discusses how the old gent's money can be saved.

Can we now get some information about the gent's financial requirements, please. Given he is 80 and in poor health, could his life be enhanced by using some of the money to pay for improved care, and/or improved accommodation? If so, that is what should probably happen. If all this is in hand already, decisions about the best savings account(s) may be the right next steps - although I would be tempted to seek the advice of an IFA, who can provide personalised advice (inheritance planning etc), rather than rely on the opinions of a bunch of strangers on the internet who know nothing about the gent's requirements.

Thank you for your post covering my fathers full circumstances, I should have been more thorough in my original post! His care and accommodation are all sorted both now and going forward should things deteriorate up to the point of hospitalisation. He has a team of care workers who visit multiple times per day to look after his needs and the house has been adapted already to suit his needs. All possible machinery etc he needs to maximise his quality of life have been sourced. this was the first thing to be looked at as I believed it to be the most important before worrying about potential returns on what's left. 

Inheritance shouldn't be a problem as his entire estate will be just short of the 325k amount where tax becomes payable. 

Savings accounts are something I have been looking at, I've already moved all his cash from various accounts with the same provider into the one paying the best interest rate but am cautious of the 85k FSCS cover limit should something major happen in the banking sector (I don't think it will but that's been said before so trying to make sure everything is covered properly). I was just wondering if there were any choices or investments I don't know about that could maximise what his cash is doing rather than just leave it sat still doing nothing. As Linton said in his post above however, for the sake of what's effectively a few hundred pounds I'm probably over complicating things

mark55man

I wouldn't worry about being all in cash at the moment - you may miss out on some growth this year, but anything that is safe enough for you to legitimately choose (given your obligations to your dad) isn't going to be costing you a lot.  Perhaps the only options I've seen in similar threads, is if you are sure he can do without some money for 2 years then you might try longer term fixes.  But even there, you don't want to go for too long should, sadly, you need to  unwind the positions