Savings help after selling property

RiderOnTheStorm

Looking for advice to max interest and min tax burden.

Just sold my parents property and the money has come to me in the short term. I am a basic rate tax payer. Mum has passed and dad has dementia so we have POA for him.

He is in residential care and needs to self fund so ultimately the money will go towards his care but we want to max the money until its needed for his funding.

Looking for best options to maximize returns. Have £200k to utilize.

Happy to lock in for a year. Am thinking we can lock some into cash ISAs but any better ideas would be appreciated.

flaneurs_lobster

Who does the money actually belong to?

Vitor

What does your mother’s will say about her share of the property and estate? Until that is established, do not assume all £200,000 belongs to Dad.

If this is Dad’s money, it needs to be held in accounts in his name, with you operating them under the registered POA. Your own basic-rate status, ISA allowance and tax position are irrelevant.

LHW99

He will have a £20k limit pa for a cash ISA. Beyond that there is the personal savings allowance, so the amount of interest he can get without paying tax will depend on his total income.

Be aware that £120k per organisation is the limit of FSCS protection, except for NS&I where the Government guarantees the money.

friolento

Premium Bonds winnings are tax free, though not guaranteed. £50k max balancehttps://www.nsandi.com/files/asset/pdf/power-of-attorney-leaflet.pdf

Albermarle

Looking for advice to max interest and min tax burden

You should look for the best return. 5% minus tax is better than 3.5% and no tax.

If he earns more than £10K in interest in a tax year, you will have to fill in a self assessment tax return for him ( regardless of how much tax may be due, which as said will depend on what other income he has ).

If some of the money is put into Premium Bonds, then this will probably avoid doing a tax return as there returns are tax free. However note my first point.

Keep_pedalling

You could open easy access to cover the first year’s fees and you can but another year’s in a one year bond and the next in a 2 year one ect.

RiderOnTheStorm

https://forums.moneysavingexpert.com/discussion/comment/82164286#Comment_82164286

Mum's share of the property is in a trust and the remainder of her estate has already been dealt with according to her wishes. After taking advice, regarding the trust, it is possible that the care system could come after her share once dad has used up all of his funding and his share of the sale.

The POA gives the remaining family the ability to manage his finances.

We are just looking for the best way to use the sale money until its needed one way or another

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82164475#Comment_82164475

The capital in the trust does not belong to your father so cannot be used to pay for his care, however depending on the terms of your mother’s will the income might be. What does the will say about what happens to the trust if the house is sold?

Vitor

I think the key issue here is establishing exactly who owns the proceeds of the sale and what the trust provisions say.

If OPs' mother's share is held in trust, it isn't necessarily available to fund father's care. Equally, it would be unwise to assume that the trust offers complete protection without examining its terms.

The fact that the money has temporarily come into OPs hands doesn't change its beneficial ownership or the associated tax liabilities.

poseidon1

Need more information as to whether the £200k are the net proceeds of house sale and if so does 50% drop into trust.

A bit disappointing if OP is not already fully conversant with the terms of the trust and what he can and can't do with the trust funds in his trustee capacity.

What he needs to get clear in his mind however, is that the trust funds are separate and distinct from his father's personal money, and should not be intermingled with accounts set up in the fathers personal name.

@Keep_pedalling could well be correct that income generated from the trust fund must be applied for the father's benefit. However the trust document (the Will ) must be reviewed to see if this is the case.

OP , has a solicitor not been involved with the estate administration and advised you on your trust duties and obligations?