Investing to pay care fees

noclaf

This thread follows another I posted in the family section regarding care planning for my mother.
I have a somewhat basic if limited understanding of investments e.g: all my investments are in Equities.
What I need to get my head around is; how could investments be used to fund care home fee's e.g: let's say a property is sold on behalf of a parent and you want to invest the proceeds to help fund the care costs. Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?
I completely get it if my mother had been putting money aside into a tracker or funds for the last 15/20 years but in this case where a property is sold and you have cash proceeds to invest in a relatively short timeframe how is that done usually and how are suitable investment products chosen? Is it simply a case of low equities exposure or defensive/wealth preservation funds being used?
*Just to add I have a deputyship for my mother and have no plans to make any decisions on her finances without explicit approval from the CoP/OPG.
 

Thrugelmir

Care annuities are one option.

dunstonh

Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.

noclaf

dunstonh said:

Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.

Ok this makes sense, I thought as much. It sounds like cash is the safest/most sensible option.
I'm surprised at the average 2 years life expectancy figure though..my father was in a nursing home much longer...>12 years combined in residential and nursing homes albeit not with Alzheimer's.

dunstonh

noclaf said:

dunstonh said:

Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.

Ok this makes sense, I thought as much. It sounds like cash is the safest/most sensible option.
I'm surprised at the average 2 years life expectancy figure though..my father was in a nursing home much longer...>12 years combined in residential and nursing homes albeit not with Alzheimer's.

That's averages for you.    I had a client who developed Alzheimer's and died within 3 months of going into a care home.

noclaf

dunstonh said:

noclaf said:

dunstonh said:

Given the known downside risks of investments, is this even possible and if so how it be done in terms of suitable products?

Yes it is possible but nowadays, it is not often considered suitable.  The average life expectancy for someone in a care home is under 2 years.    So, investing into assets that should be held for 5-10 years is generally not considered to be suitable unless there are other justifications.

Ok this makes sense, I thought as much. It sounds like cash is the safest/most sensible option.
I'm surprised at the average 2 years life expectancy figure though..my father was in a nursing home much longer...>12 years combined in residential and nursing homes albeit not with Alzheimer's.

That's averages for you.    I had a client who developed Alzheimer's and died within 3 months of going into a care home.

Yep, v unpredictable.....my mother was diagnosed >10 years back and even the diagnosis between individuals differs adding more complexity and unpredictability.

Sea_Shell

Would a "pots" system work?

Keep £x cash for the immediate future (1-2 years), then lower risk investments for medium term (3-7 years) and more adventurous funds for the long term (7+ years).

I suppose it does depend also on the size of total funds available v. annual care costs.   

There could be a risk of the pot running out in the long term, if it's all kept in cash, or running out in the short term if investments tank.

noclaf

Sea_Shell said:

Would a "pots" system work?

Keep £x cash for the immediate future (1-2 years), then lower risk investments for medium term (3-7 years) and more adventurous funds for the long term (7+ years).

I suppose it does depend also on the size of total funds available v. annual care costs.   

There could be a risk of the pot running out in the long term, if it's all kept in cash, or running out in the short term if investments tank.

Makes sense...I would be curious what type of funds could be used for the 3-7 year bucket..maybe something like a VLS 40...I could be completely wrong there, my own investments are 100% Equities so quite heavily skewed to one extreme of the risk spectrum.

LHW99

As a Deputy you have to ensure everything is for your mother's best interests. If she has never invested in stock market funds, it is probably not sensible for you to start to do so on now her behalf. There are independent advisers who specialise in this area, and that may be a good place to start.

Bobziz

May be worth looking at this if you've not already done so: https://www.gov.uk/guidance/investing-for-someone-as-their-attorney-or-deputy

csgohan4

If your still wanting to invest, after all the reading you have done, I would probably put it in wealth preservation funds and may also consider income funds too, but not equities if it is for care home fees due to life expectancy and investment windows not matching. 

Premium bonds would be a good shout if your risk averse