Funding care home from house sale

Kelvin_Hall

Hi, I've had some great advice on these forums in the past, so I hope I'm not pushing my luck by trying again :-)

My 95 yr old mother has had to go into a care home after a couple of fall's and altzhiemers. It is private care home and costs her about £6,000 a month after some state contribution (we are in Scotland).  Some of that is covered by her pensions but to continue funding this, her house is going to need to be sold.  This money should support her current situation for many years.

However, I just realised that I don't know what to do with all the cash from the sale of the house.  Which will be needed to pay out every month for years to come (hopefully), to fund the care home.

Do I just put the first £20,000 in an ISA and split the rest between easy access accounts (to use in the next couple of years) and maybe some investments (for years beyond that) ?

Or are their products (tax efficient or otherwise) that I can pay the lump sum into, and get a steady income of multiple thousands a month ?  A kind of annuity ?

Also, she has had the house for about 40 years - will there be capital gains tax to be paid when it's sold ?

My sisters and I have power of attorney but the money will still be in my mothers name (unless there is a benefit in doing something else ?).

Sorry for rambling, but it's only now that we are getting the point of selling, that all these questions have come to light.

Thanks for any advice, or suggestion of info I could look at.

elsien

I can’t answer your questions about the financial side of things, but the money does need to stay in your mother’s name.
It opens all sorts of safeguarding questions otherwise.

Have a read of this, which covers the basics on the annuity front.
https://www.moneyhelper.org.uk/en/family-and-care/long-term-care/immediate-needs-annuity
Although thinking about it, investments are probably not a great idea given the possible timescales involved. You could look at some fixed rate bonds that will will give her a better rate of interest then easy access.

if you are talking about a substantial amount of money, it might be an occasion where it’s worth paying for one off advice. 

Albermarle

Kelvin_Hall said:

Hi, I've had some great advice on these forums in the past, so I hope I'm not pushing my luck by trying again :-)

My 95 yr old mother has had to go into a care home after a couple of fall's and altzhiemers. It is private care home and costs her about £6,000 a month after some state contribution (we are in Scotland).  Some of that is covered by her pensions but to continue funding this, her house is going to need to be sold.  This money should support her current situation for many years.

However, I just realised that I don't know what to do with all the cash from the sale of the house.  Which will be needed to pay out every month for years to come (hopefully), to fund the care home.

Do I just put the first £20,000 in an ISA and split the rest between easy access accounts (to use in the next couple of years) and maybe some investments (for years beyond that) ? Investing should be on a minimum 5 year time scale, preferably longer. So as suggested some longer term fixed rate savings accounts ( 1, 2, 3 year etc ) could be one way forward as well as easy access.
Also you should not hold more than £85K with any one institution, unless it is NS&I ( although their interest rates are not great) 
Tax on interest could be significant, but it depends on what her actual total income is?

Savings - All Guides - MoneySavingExpert

Or are their products (tax efficient or otherwise) that I can pay the lump sum into, and get a steady income of multiple thousands a month ?  A kind of annuity ?

Also, she has had the house for about 40 years - will there be capital gains tax to be paid when it's sold ?Never any CGT when you sell your main residence.

My sisters and I have power of attorney but the money will still be in my mothers name (unless there is a benefit in doing something else ?).Yes

Sorry for rambling, but it's only now that we are getting the point of selling, that all these questions have come to light.

Thanks for any advice, or suggestion of info I could look at.

Some comments in bold.
I am not sure about annuities, best to read the link already provided.

Savvy_Sue

Note there is an exemption if you sell a house for how much is protected in the event of a bank failure. I believe it's time limited, but it means you don't have to panic straight away.

Albermarle

Savvy_Sue said:

Note there is an exemption if you sell a house for how much is protected in the event of a bank failure. I believe it's time limited, but it means you don't have to panic straight away.

Temporary high balances | Check your money is protected | FSCS

Kelvin_Hall

Some good advice, Thanks.

I should probably looked at moneyhelper before posting, but was only aware of it in terms of pension info previously. The bit about no capital gains on main residence sale is a relief.

RAS

If mum is self-funding, check attendance allowance. The home should help apply.

Kelvin_Hall

RAS said:

If mum is self-funding, check attendance allowance. The home should help apply.

Thanks, we already have that in place.

dinosaur66

Kelvin_Hall said:

Hi, I've had some great advice on these forums in the past, so I hope I'm not pushing my luck by trying again :-)

My 95 yr old mother has had to go into a care home after a couple of fall's and altzhiemers. It is private care home and costs her about £6,000 a month after some state contribution (we are in Scotland).  Some of that is covered by her pensions but to continue funding this, her house is going to need to be sold.  This money should support her current situation for many years.

However, I just realised that I don't know what to do with all the cash from the sale of the house.  Which will be needed to pay out every month for years to come (hopefully), to fund the care home.

Do I just put the first £20,000 in an ISA and split the rest between easy access accounts (to use in the next couple of years) and maybe some investments (for years beyond that) ?

Or are their products (tax efficient or otherwise) that I can pay the lump sum into, and get a steady income of multiple thousands a month ?  A kind of annuity ?

Also, she has had the house for about 40 years - will there be capital gains tax to be paid when it's sold ?

My sisters and I have power of attorney but the money will still be in my mothers name (unless there is a benefit in doing something else ?).

Sorry for rambling, but it's only now that we are getting the point of selling, that all these questions have come to light.

Thanks for any advice, or suggestion of info I could look at.

i can only give my opinion  from english law point of view

i am guessing it will be mostly alligned with scottish law

captial gains will not be assesesed on the last 40 years

will only be the gain from going into a home- so negligable in todays scotand property market seling wise

to late now but in council care if any of your sisters lived and made there home in your mothers house to look after her before she had to enter a care home and were over 60 years of age property will be set aside money wise if they genuinley lived there and would not count as part of her financial means test.

i would rent the house as it would generate the most income as rents have shot up in last year in central belt scotland