LPoA restrictions

As attorney, you must act in the best interests of the donor. Investments of any type must be secure; a good example would be NS&I Direct Saver. It pays just under 1% but is easy access.
You are also covered for well over the normal protected £85k as it's Government backed.

No one can predict the future, and your Mum may well need immediate access to a large sum at any time.

Have you talked it through with her (assuming she retains capacity)?

Primrose wrote: »

Fixed rate bonds are one option but obviously you need to time them so that you never run out of money to paycare home fees.
I wasn,t aware of prohibitions on the use of fund managers -perhaps somebody else can comment on that.
Online savings accounts may pay slightly higher interest rates but many will not accept P of A. I don,t know if there is a definitive list anywhere of those which do.
Does your mother pay income tax? If so it may make sense to make use of her annual isa allowance or possibly even make full use of her £50k premium bond allowance.
We,re obviously not aware of what other income she has to help fund her nursing home fees but bearing in mind they seem to be rising up to 10%p.a. It will be difficult to find a safe investment which generates this level of return.

The restriction on use of fund managers is not a general one, but would have been written into this particular POA. Makes sense as the last place this money should go at her stage of life is equities.

I'm not a fan of Immediate Care Annuities but the OP should be considering them here. Although there is a strong possibility that much of the cost will be lost to the insurer, given the mother's age, the amount lost might be quite low relative to the risk of running out of money if she lives a very long time. The OP should take independent financial advice from an independent adviser registered with the Society of Later Life Advisers - Immediate Care Annuities are only offered via advisers.

The nonsensical restriction on using fund managers would normally be a damn nuisance, but at her age it may not matter too much. Had she lost capacity when she was younger (say in her 70s with a decade of life ahead of her), the best case scenario is that it would have forced the attorneys to pay through the nose in costs and take on unnecessary risks in order to invest in a portfolio of individual stocks and shares via an expensive discretionary fund manager. In the worst case the attorneys might have played on the stockmarket themselves and lost her money.

Primrose wrote: »

Yes I suppose so. But as a general point, what would one do if a fair percentage of an individual,s assets are already invested in say, ISA protected funds. I suppose one can always convert them to cash Isas now but if the values are above the compensation limit, dividing and allocating the money amongst several cash ISAs could be tricky.

If cash was the most appropriate investment, and the amount is large enough to make splitting it between numerous banks prohibitive, it could be invested in a money market fund. The return would be slightly worse than zero, but if you want a risk-free investment and don't want to open numerous accounts under the FSCS limit, that's the obvious answer. And you wouldn't be losing that much as most best-buy accounts are online-only and not attorney-friendly.

However it would take very special circumstances for it to be suitable to invest that much in cash. If someone has power of attorney for an ISA millionaire then dumping all their investments and burying it in the ground would be in breach of the attorney's legal duty to invest the donor's money as a prudent person of business would.

When I was my mother's attorney I kept a years money in instant access, then the next tranche in 6 months etc up to 5 years but at that time it was worth splitting the money up like that. Any savings she already had ISAs & bonds stayed where they were. I also moved some into ISAs as soon as there was "space" (limits were lower then). You need to keep enough available to replace at short notice any hearing aids & glasses that get lost & broken, bearing in mind that any loss of ability to communicate speeds up the rate of dementia.


As for where to save - anywhere as long as it is covered for £85k. Also watch for the ones which come under the same umbrella. But to save using a POA that isn't covered would be too risky.