Invest house sale proceeds for care

tkctv

Elderly relatives 96 and 91 sold house, need to make as much interest as possible to help fund shortfall in current fees, but still keep money accessible in case one dies and the other may need care home for fees top up

Keep_pedalling

They can’t really invest the money at their age and in their current position, so they are going to be stuck with low interest cash savings accounts. They need to be aware that anything offering high interest is going to be high risk or a scam. 

What is their current living arrangement and what do you mean by fees? I am presuming they are in something like assisted living / sheltered housing with careers visiting. If so are they receiving attendance allowance? 

Farway

As above, but consider some in Premium Bonds which would be safe with possible boost from winnings but not instant access with rest in ready access cash savings, watching out for the £85K savings guarantee just in case, eggs & baskets

tkctv

Hi, Thanks Keep_pedalling and Farway.  Pretty much what I'd thought, but in case I wasn't aware of anything.  Yes in supported living, but independant, so pay rent including bills and daily pop in.  No care fees as such as yet, but I'm aware they may need some in the future.  Yes they get attendance allowance.  I was thinking premium bonds and possibly NS&I as they guarantee safe money for higher amounts, or as you say, a few accounts to spread the risk bearing in mind the £85K limit.  Thanks again

Murphybear

Farway said:

As above, but consider some in Premium Bonds which would be safe with possible boost from winnings but not instant access with rest in ready access cash savings, watching out for the £85K savings guarantee just in case, eggs & baskets

Cashing in Premium Bonds may not be instant access but these days you can cash them in online and the money goes straight into your bank account and takes a surprisingly short time.  Last time I did this I had the money in 2 working days.  

PennyForThem_2

Wouldn't necessarily agree that cannot invest in a Stocks & Shares portfolio - really depends on amount from house sale.  For instance if 600k then would certainly warrant investigation.

If reasonable amount maybe an independent financial advisor could be a solution?  

blue.peter

It might be worth considering gilts.

My mother's in a care home. As her attorneys, my sister and I invested the bulk of her capital (which includes the sale proceeds from the house) in gilts. They provide some income whilst preserving capital. Of course there's a bit of volatility, but it's not as bad as with many investments. Some gilts give a respectable income, but at the expense of eroding capital value a bit more quickly.There's a balance to be struck.

PennyForThem_2

You could also invest in an annuity - apparently there are ones that specialise in paying care fees......  Again would advise IFA advice.

blue.peter

PennyForThem_2 said:

You could also invest in an annuity - apparently there are ones that specialise in paying care fees......  Again would advise IFA advice.

You're thinking of Immediate Needs Annuities. These are Purchased Life Annuities, but with a tax break: no income tax payable if the income is paid by the insurer directly to the care home. (The capital content of a PLA isn't taxed anyway, and very low interest rates mean that there's currently very little tax due on the interest element.) More information here.

As with any annuity, they're great if you outlive normal life expectancy, but you don't get your money back if you die relatively young. They're longevity insurance.

My information's about five years out of date, but I used to work for an annuity provider. As I recall it, there were then only two UK insurers offering INAs: Friends Life (now subsumed into the Aviva colossus) and Partnership Life (now merged into Just).

I did toy with mentioning these earlier, but am a bit concerned by the fact that there are two people involved here. I don't know whether INAs are written on a joint life basis or, if not, how they could appropriately be set up in this case.

This is definitely one for an IFA. As I recall it, (a) insurers won't sell them directly, and (b) there are only a few specialist IFAs that deal with INAs.