Fixed rate accounts

stevec59

My Father in law has Dementia and is in a care home, my wife has both lasting power of attorney, so she has access to his bank account. We hope to complete on the sale of his bungalow early January, so, around £280k will go into his current account, so I was thinking about opening a fixed rate ISA and some fixed rate savings accounts, the question is, if I open an account for 2 years and he passes away in that time, can we withdraw the money without penalty? No one knows how long he will last, with dementia, he has a mixture of the 2 kinds, your body can ‘shut down all of a sudden. Or do I play it safe and put it in a regular ISA and savings account?

Many thanks,
Steve

BooJewels

Fixed term accounts often have clauses that allow you to close them within the term on either death or in some cases terminal illness.  But there are often restrictions on opening them at all under an LPA.  Some categorically say that you can't, some you can, but it might be a paper based application.  So your wife would need to check any she's interested in carefully.

If he's in care - would you need access to those funds to pay for care?  

ETA:  I'm going to state this up front, because someone soon will.  Under an LPA, you can only take actions that are in the best interests of the Donor.

jimjames

ISA limit is £20k so that's going to take a while to get into ISAs but even a fixed rate ISA is accessible at any point subject to a penalty. Non ISAs aren't generally accessible before the term is up but death is normally one of the exceptions.

fuzzzzy

The power of attorney will cease on the death of your father in law and access to his accounts will be frozen.

The funds would be released to the executor of his estate when the grant of probate was obtained. I don't think a penalty would be charged but you might want to check the terms and conditions of any account you intend to open.

My parents had numerous fixed rate accounts when they died and no penalties were charged by any provider when the funds were released, although for some accounts which matured before probate was granted the funds ended up being moved to holding accounts with very low interest rates.

Presumably you will be keeping sufficient cash accessible in an easy access account to cover his care costs. Maybe a mixture of easy access and longer and shorter term fixes that are staggered would be more suitable.

stevec59

Thanks everyone, yes care is expensive £72k a year, so, less than 4 years, the council will pay towards that when he is low on money, I think £23k, but at 6 k a month that won’t last long, I’ve heard that the council will pay 50%, so that would still leave Dad to pay £3k a month, just over 7 months, we’ve been told that if he runs out of money, he won’t be moved, so I guess that’s one thing. I need to investigate this further but probably avoid fixed term, or maybe 1 year fixed and a fair bit easy access

mills112

stevec59 said:

Thanks everyone, yes care is expensive £72k a year, so, less than 4 years, the council will pay towards that when he is low on money, I think £23k, but at 6 k a month that won’t last long, I’ve heard that the council will pay 50%, so that would still leave Dad to pay £3k a month, just over 7 months, we’ve been told that if he runs out of money, he won’t be moved, so I guess that’s one thing. I need to investigate this further but probably avoid fixed term, or maybe 1 year fixed and a fair bit easy access

that's interesting.  so the council will pay 50% towards the cost when you are down to 23k but when you are completely wiped out, they won't move you to a cheaper home but will continue to pay the full fee?  that is very generous.  i didn't know that, i thought they would move you to a cheaper home when they have to fully fund it.

stevec59

I think that it depends on the home and the council, I don’t think that he’ll still be alive in 3 years time, but that’s a guess