Holding savings for someone

Naf wrote: »

Aren't trustee accounts still a thing? Or an account which requires two signatures for a withdrawal?

You could create an account for a trust, but then OP needs to have a trust. You could create an account which requires multiple signatories if you have a club or society or company but then OP would need documentation for that. So all of those ideas create complications and expenses. You could create a joint account if you want to share the money, but OP presumably doesn't want to share the money , they want it still to be theirs but someone else control it. Presumably as it's a large sum they would still want to get the interest on it for themselves.

Unfortunately unless you open a formal trust or company or club/society account, the banks' terms and conditions will always say that the money in the account will be treated from their perspective as belonging to the person who runs the account and puts it there, and they do not recognise nominee or private trust arrangements where one person is holding the cash in their name but it beneficially belongs to someone else.

So, one way of doing it is just to loan the money to the elderly relative and properly document it. For inheritance purposes the loan owed back to OP would be taken off the value of the 'estate' and settled before any dividing up of the remaining assets - assuming there is actually enough money in the estate and the elderly relative didn't in the meantime accidently spend it or have it nicked by confidence tricksters or fraudsters. And assuming the executors or other relatives believed the loan documentation was genuine and not just constructed artificially by OP to get the relative's money as they became even more elderly or infirm or lost their marbles .

However a problem with the relative holding substantial cash balances in some circumstances is that if they were hoping to receive means-tested benefits of some kind when large amounts of cash would scupper that; the loan wouldn't automatically be taken off the cash to give a 'real net cash' figure. The loan would have to be repayable on demand so you could settle it quick and avoid such problems (and be able to sue the relative if they got any funny ideas about not wanting to pay it back when you genuinely needed it).

Also, if the loan has an interest rate it will be wasteful for tax as the relative will pay tax on the interest rate on 'their money' they get from the bank account and then OP will pay tax on the interest they get from their relative on the loan, while the interest expense for the relative is not tax-deductible. You could avoid the 'tax leakage' by documenting the loan just to be at 0%, but then OP doesn't have any legal right to any income from their substantial amount of money which will be disappointing as the value of the money declines in real terms due to inflation over time.

So, none of the easiest solutions are ideal. Putting the money into different fixed term deposits with banks, or into accounts with limited access only a couple of times a year without penalty, could be a help. The usefulness of those sorts of things depends on whether the OP has some serious problems or addictions (eg drugs or booze or gambling or compulsive spending or whatever) which would override the threat of a 'penalty' for early access: "oh whoops I've withdrawn £1000, still I have thousands so I can afford to lose a bit of interest".

Similarly if you know your relative has £20,000 cash belonging to you, and you go out and blow £15,000 on a credit card - if you said to the elderly relative "thanks for looking after my money, I now have a really important credit card bill which is charging me interest at 20% APR so can I get £15,000 back to settle the bill please", the relative would probably say yes unless they wanted you to suffer unncessarily. So, the 'giving money to someone else for safekeeping' trick is not necessarily going to solve all problems or reduce temptations.

But for simple situations to avoid temptation a basic, well-documented, loan arrangement might make sense (despite the practical issues that could occur) and for a more complex situation where you need 'protecting from yourself' a more complex and expensive trust arrangement could be used with one or more people formally acting as trustee.

PasturesNew wrote: »

Just open a simple savings account that has no online access .... and give them your passbook for safekeeping.

If it's still your money though, and you can prove who you are, you can still get access to your funds even with a 'lost' passbook - if you don't mind the hassle. A more modern day equivalent would be to get an online account, but have someone else set up the online ID and password and security questions so that you don't get tempted to accidentally use it.

In terms of putting some not-insurmountable-but-annoying-enough-to prevent casual use blockages in the way, the AA idea seems the best so far