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    • kyotikid
    • By kyotikid 10th Oct 16, 11:22 PM
    • 4Posts
    • 1Thanks
    POA for my Ma - best place to hold her money?
    • #1
    • 10th Oct 16, 11:22 PM
    POA for my Ma - best place to hold her money? 10th Oct 16 at 11:22 PM
    I've become POA to my mother who has recently taken residence in a nursing home due to dementia. I've just sold her flat and placed the proceeds - around 90k - in our joint TSB current account. She has further investments with Aviva, Blackrock & Hendersons to the value of around 35k in the form of Unit Trusts. She also has a private pension that just falls short of covering her monthly costs at the home (by around 90per month). I'm concerned to keep her money as safe as possible and wonder if it is really wise to hold on to the Unit Trusts in the current climate. I'm leaning towards cashing in her unit trusts and spreading the money across some of the savings accounts recommended on this site. Any advice / opinions from those more experienced in these matters gratefully received.
    with thanks.
Page 1
    • fwor
    • By fwor 11th Oct 16, 1:36 AM
    • 5,995 Posts
    • 4,049 Thanks
    • #2
    • 11th Oct 16, 1:36 AM
    • #2
    • 11th Oct 16, 1:36 AM
    In that situation I would seriously consider NS&I, if you don't want to be constantly chasing the latest best interest rates on several smaller accounts.

    Their max investment is much higher than you are expecting to invest, there's no worry about FSCS guarantee limits and the rate in, for example, their Income Bond is pretty competitive in today's climate for a no-notice account.
    • bowlhead99
    • By bowlhead99 11th Oct 16, 5:36 AM
    • 7,833 Posts
    • 14,306 Thanks
    • #3
    • 11th Oct 16, 5:36 AM
    • #3
    • 11th Oct 16, 5:36 AM
    You don't say what type of investments are held by the unit trusts but assuming they are a 'normal' mix of equities, bonds and other assets, there's probably nothing special about "the current climate" that means they're no longer able to do their job of maintaining or growing their value in real terms over the next decade plus. Unit trusts do go up and down in value all the time but the general trajectory is up over the long term, that is why people invest in them. Whereas cash in a 'safe' bank account or NS&I product at 1% is likely to fall short of the 'cost' of inflation.

    Based on the current shortfall of living costs vs pension income she is burning through about 1k a year. Presumably the pension income will go up by at least the headline rate of inflation each year, but the costs of a care home might go up by more than this.

    Say your shortfall worsened to 180 a month instead of 90 a month. At that rate, her existing cash reserves (the 90k from the house sale) would 'only' last her for the next 500 months instead of the next 1000 months. Is she going to live another 500 months (40 years)? If not, there is probably no need to 'cash in' the unit trust investments. And if she *is* going to live another 10, 20, 30, 40 years then it probably makes sense to have some of the money invested, as it currently is, rather than converted to cash with lower prospects of keeping pace with inflation.

    Obviously, the shortfall from pension income vs what they want to charge for a care home a decade from now might worsen significantly from 90 a month or 180 a month to some bigger number. So there is probably not 40 years of money in the bank account and the above is a simplification. However, the average lifespan of a woman with alzheimers or other dementias is 4.5-5 years (not a doctor, just plucking stats haphazardly off the internet). We don't know your mother's status but even ten or twenty years would be really going some. So, seems like the current cash stash is going to be perfectly adequate.

    As such, selling unit trusts to get yet more cash, and then dumping it in a savings account which returns significantly less than inflation (interest rates on the floor, while RPI of 2%+ is projected for 2017) does not seem particularly sensible.

    So, you would not be deficient in your duty if you kept the unit trusts sitting where they are. Such investments are the best chance of preserving (or growing) wealth for the next generation over the long term.

    This doesn't mean you shouldn't take your own advice and still spread the existing 90k cash stash over a selection of accounts offering decent rates.

    But it is hard work to constantly maximise the very best rates, and it likely not something your mother would have been bothered to do if she didn't have her condition preventing her from doing it herself. Would she really devote time to setting up a Lloyds current account with 4.9k in it and a Santander account with 19.9k in it and a TSB account with 1.9k in it and set up standing orders to cycle money between them to meet the minimum monthly deposits and ensure they each had the right number of direct debits and that someone went to the shops for her and used contactless payments to maximise the cashback? So, just because you have PoA it doesn't mean you have a responsibility to do that for her, unless you have a passion for it.

    Technically you could get a good rate of return by playing the 'promotional rate current account' game, but sticking most of it into a term deposit and a couple of thousand in a decent current account to cover the next couple of years living costs would seem like the way to go. As mentioned by the poster above, the NS&I monthly income bonds would get you a percent on the whole 90k with zero hassle of shopping around, if you didn't want to try to eke out another half percent by looking for good deals on multi-year term deposits.
    • talexuser
    • By talexuser 11th Oct 16, 11:53 AM
    • 2,398 Posts
    • 1,896 Thanks
    • #4
    • 11th Oct 16, 11:53 AM
    • #4
    • 11th Oct 16, 11:53 AM
    I'm in a very similar situation to yourself. My Mums' various pensions cover around half of the home costs, I switched her ISA into monthly income funds and they more or less cover the other half, with the capital amount staying pretty constant. Even if we have a major correction in the stock market, some dividends would still arrive, and I am confident there was enough money in the joint savings account to cover any shortfall for many years to come.
    She is now 86 so the existing savings would cover for more than enough time even if the ISA income halved or more. You can do your own assumptions, but with a reasonable cash cover I see no immediate need to cash in funds. Our last home fees increase was 7% so bear that in mind in any calculations. Have you applied for attendance allowance? this should be an extra 4k3 a year for someone unable to look after themselves.
    Last edited by talexuser; 11-10-2016 at 12:00 PM.
    • kyotikid
    • By kyotikid 11th Oct 16, 3:09 PM
    • 4 Posts
    • 1 Thanks
    • #5
    • 11th Oct 16, 3:09 PM
    • #5
    • 11th Oct 16, 3:09 PM
    Many thanks for taking the time to write such a comprehensive & helpful replies - really appreciated.
    Last edited by kyotikid; 11-10-2016 at 3:13 PM. Reason: grammar
    • HarryFlatters
    • By HarryFlatters 11th Oct 16, 10:01 PM
    • 36 Posts
    • 9 Thanks
    • #6
    • 11th Oct 16, 10:01 PM
    • #6
    • 11th Oct 16, 10:01 PM
    I am also in a similar position but 5 years further on.
    Property sold and proceeds invested across various NS&I accounts, 5 years later my old dad is just the same as the day he went in despite an 18 month life span estimate, its a horrible disease, more so for the family I think.
    NS&I just made looking after the money easy, there are several other eventual beneficiaries when the time finally arrives and it wasn't worth my while putting in a lot of effort chasing the extra only for the benefit to be shared among x. Each case is unique, if you have the time and energy to devote to the financial side go ahead, it isn't too difficult to act as a POA on their behalf, just enjoy the times with them while they are lucid.
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