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    • kajman
    • By kajman 9th May 18, 11:28 AM
    • 10Posts
    • 1Thanks
    kajman
    Investing to finance care home fees
    • #1
    • 9th May 18, 11:28 AM
    Investing to finance care home fees 9th May 18 at 11:28 AM
    My siblings and I have reached the stage in life where we have had to move our parents into a care home and take over managing their financial affairs. We have joint Power of Attourney for financial matters which means all of our signatures are required to move any money. We will need to sell their house. Initially we will use their savings and then proceeds from the house sale to pay for the care home fees. While it lasts we would like to invest the money and take out a monthly sum to pay the bills.

    This must be a situation many others have been in and I'd like any advice or tips on the type of investment we should be looking at, and are there any restrictions on opening investment accounts in other peoples names?

    Thanks
Page 1
    • Zanderman
    • By Zanderman 9th May 18, 11:36 AM
    • 1,525 Posts
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    Zanderman
    • #2
    • 9th May 18, 11:36 AM
    • #2
    • 9th May 18, 11:36 AM
    You can put the house proceeds in savings or invest it or buy a special annuity (if it works for your situation).

    BUT - power of attorney gives you a duty to look after the money (which is, obviously, theirs not yours) in accordance with their financial philosophy - as you understand it. You are acting for them. So, if they were always wary of risk and didn't invest, it may not be appropriate to invest in stocks and shares as that is risking their capital. If they always kept the capital safe in a bank then that's, arguably, what you should be doing too.

    I and my siblings are in a similar situation - but we are going for caution - intending to put the cash capital very safely in bank accounts, NS&I initially for complete safety, once the house is sold. We don't feel our mother would want to risk the capital - and neither do we.

    And, investments are long term. We don't know how long we've got (she'll be 90 next year). 1 year, 2 years or 15? So savings rather than investing makes more sense to us that way too.
    • bostonerimus
    • By bostonerimus 9th May 18, 11:42 AM
    • 1,832 Posts
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    bostonerimus
    • #3
    • 9th May 18, 11:42 AM
    • #3
    • 9th May 18, 11:42 AM
    This is one situation where you want to eliminate risk. So one of the specialized annuity products or a saving account/bond ladder might be appropriate. As an aside care costs are something that could be take care of with insurance products.....it's disappointing that the UK has such a poor market for those products.
    Misanthrope in search of similar for mutual loathing
    • xylophone
    • By xylophone 9th May 18, 12:15 PM
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    xylophone
    • #4
    • 9th May 18, 12:15 PM
    • #4
    • 9th May 18, 12:15 PM
    My relative has PoA for his relative who always ran a portfolio of shares etc as well as cash deposits - the proceeds from sale of the family home were similarly invested/saved and the interest/dividends (together with income from pensions) and some capital pay for the care home fees.

    Have you checked whether your parent (s) is/are eligible for Attendance Allowance?

    If they have moved into a Nursing Home, is there eligibility for the

    FNC?

    (My relative's relative has recently moved from a residential home to a Nursing Home and the administrator will be applying for this).

    https://caretobedifferent.co.uk/registered-nursing-care-contribution/

    Have they been assessed for CHC funding?

    https://www.nhs.uk/conditions/social-care-and-support/nhs-continuing-care/

    You can take independent financial advice

    https://societyoflaterlifeadvisers.co.uk/

    and will need to do so if you are considering an immediate needs annuity for either/both.

    https://www.justadviser.com/documents/ina-vs-inv-care-funding-advice-sales-aid1312729.pdf

    http://www.aviva-for-advisers.co.uk/adviser/site/public/products/retirement-solutions/lifetime-care/immediate-lifetime-care
    • Linton
    • By Linton 9th May 18, 12:15 PM
    • 9,387 Posts
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    Linton
    • #5
    • 9th May 18, 12:15 PM
    • #5
    • 9th May 18, 12:15 PM
    I dont think you should invest in anything with any risk - your parents needs are probably relatively short term, risk is only mitigated in the long term. Interest rates on a significant sum of money (n00K?) will be low, say 1% or there abouts from NS&I, so you will be drawing down capital.

    As the others have said, you could investigate immediate needs care annuities which may appear expensive but will cover your parents no matter how long they live.
    • Malthusian
    • By Malthusian 9th May 18, 12:34 PM
    • 4,113 Posts
    • 6,451 Thanks
    Malthusian
    • #6
    • 9th May 18, 12:34 PM
    • #6
    • 9th May 18, 12:34 PM
    The OP should see an Independent Financial Adviser. Attorneys have a legal duty to manage the donor's money as a prudent person of business would. If they are not 100% confident in their ability to do so, they should take regulated professional advice, which will satisfy their legal duty.

    There is not nearly enough information in this thread to even begin to suggest how their parents' money should be invested.

    As an aside care costs are something that could be take care of with insurance products.....it's disappointing that the UK has such a poor market for those products.
    Originally posted by bostonerimus
    Poor market for a poor product. Insurance is supposed to reduce risk and care annuities carry a significant risk of losing a very large sum of money to the insurer, given the average stay in a care home is two years.

    Yes, that two year average has a very long tail, and the annuity eliminates the risk that you are in that long tail, run out of money and fall on the tender mercy of the State. But it's a very tricky balancing act between these two risks, and requires independent professional advice.

    There are two insurers in the market (used to be three, but two merged) and the reason there aren't more isn't because there is so much demand for these products that the number of people beating down the insurers' doors caused their offices to fall over.
    • xylophone
    • By xylophone 9th May 18, 12:49 PM
    • 25,374 Posts
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    xylophone
    • #7
    • 9th May 18, 12:49 PM
    • #7
    • 9th May 18, 12:49 PM
    Attendance Allowance?
    There is more information here

    https://www.gov.uk/attendance-allowance/what-youll-get
    • A_T
    • By A_T 9th May 18, 1:24 PM
    • 420 Posts
    • 273 Thanks
    A_T
    • #8
    • 9th May 18, 1:24 PM
    • #8
    • 9th May 18, 1:24 PM
    Is it a Lasting Power of Attorney or Enduring?

    Do your parents still have mental capacity? If they do it's up to them how the money is invested. If they don't then any decision must be made in their best interests e.g. maybe investing may increase their chances of staying in a better care home. It should not be investing to attempt to maximise an inheritance.
    • LHW99
    • By LHW99 9th May 18, 1:30 PM
    • 1,285 Posts
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    LHW99
    • #9
    • 9th May 18, 1:30 PM
    • #9
    • 9th May 18, 1:30 PM
    Whilst I agree with malthusian's comments, there is another wat to look at immediate care needs annuities.
    They take away the worry of having to manage another person's finances (if they are a suitable product) over an indeterminate time period.
    Although expensive, its quite possible that they will us up only a part of the available funds, leaving the remainder to be saved / invested and hopefully grow.
    Worth talking to an adviser from SOLLA if you consider this route
    https://societyoflaterlifeadvisers.co.uk/
    • le loup
    • By le loup 9th May 18, 1:48 PM
    • 3,808 Posts
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    le loup
    They take away the worry of having to manage another person's finances (if they are a suitable product) over an indeterminate time period.
    Originally posted by LHW99
    Quite agree.
    I took one out for a relative who survived for six and a half years. The break-even point was four years. But even more important was the lack of worry during that six and a half years.
    Meanwhile I invested the balance of the house sale and made a very nice return for the beneficiaries.
    • kajman
    • By kajman 9th May 18, 3:47 PM
    • 10 Posts
    • 1 Thanks
    kajman
    Thanks to all that replied. Lots of useful information in there which we will investigate in detail. I don't think the annuity route will work for us as the total assets only equate to about about 3 years of care home fees after which we will have to move them to a state funded place.

    If we decide on a savings account to get at least some interest on the house sale proceeds, is it easy to open an account in parents names but with us controlling the transactions? We have finally got that with their bank account but even when we had the PoA certificates it took a ridiculously long time (months!) to get through the bank's bureaucracy until we were allowed a cheque book. We are not allowed online access because we have joint PoA status.
    • bostonerimus
    • By bostonerimus 9th May 18, 5:06 PM
    • 1,832 Posts
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    bostonerimus
    Budgeting for care is difficult from both mathematical and emotional perspectives because it has to include factors for health and lifespan. FYI I think the average care home stay is 2.5 years and the expectation is that the vast majority of people do not leave them once they enter.
    Misanthrope in search of similar for mutual loathing
    • xylophone
    • By xylophone 9th May 18, 5:44 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    is it easy to open an account in parents names but with us controlling the transactions?
    It depends on the institution - some are very efficient.

    My relative says you should ensure that you have several properly certified copies of the PoAs if you are intending to open more than one account.
    • le loup
    • By le loup 9th May 18, 8:21 PM
    • 3,808 Posts
    • 3,758 Thanks
    le loup
    It depends on the institution - some are very efficient.
    Originally posted by xylophone
    I have found HSBC to be great and Nationwide to be terrible.

    My relative says you should ensure that you have several properly certified copies of the PoAs if you are intending to open more than one account.
    Originally posted by xylophone
    My experience is that one copy is sufficient as the bank will copy it and return the original - like they do with death certificates. However it can't hurt to have more copies should the need arise.
    • kidmugsy
    • By kidmugsy 9th May 18, 9:45 PM
    • 10,568 Posts
    • 7,234 Thanks
    kidmugsy
    I don't think the annuity route will work for us as the total assets only equate to about about 3 years of care home fees
    Originally posted by kajman
    The annuity doesn't need to cover all the fees, only the difference between the fees and their after-tax incomes.
    Free the dunston one next time too.
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