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    • GerryFP
    • By GerryFP 8th Jul 18, 7:08 PM
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    GerryFP
    LPoA restrictions
    • #1
    • 8th Jul 18, 7:08 PM
    LPoA restrictions 8th Jul 18 at 7:08 PM
    Hi All. I am the attorney for my 96 year old mother who is in a nursing home. We have a good problem to have : the proceeds from a house sale to fund that care for the likely future.
    LPoA precludes the use of a Fund manager but what else I wonder ? Can I split the cash into fixed rate bonds ( they usually have no penalty at death ) ? OR must I restrict myself to "high street" bank facilities ? what other considerations ?
Page 1
    • Margot123
    • By Margot123 8th Jul 18, 7:29 PM
    • 947 Posts
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    Margot123
    • #2
    • 8th Jul 18, 7:29 PM
    • #2
    • 8th Jul 18, 7:29 PM
    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
    • By Primrose 8th Jul 18, 7:34 PM
    • 8,109 Posts
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    Primrose
    • #3
    • 8th Jul 18, 7:34 PM
    • #3
    • 8th Jul 18, 7:34 PM
    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.
    • GerryFP
    • By GerryFP 9th Jul 18, 9:02 AM
    • 2 Posts
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    GerryFP
    • #4
    • 9th Jul 18, 9:02 AM
    • #4
    • 9th Jul 18, 9:02 AM
    Thanks for your replies. On the point of care fees rising: In fact income (state and personal pension) will rise less than care so the deficit will rise by an even greater percentage unfortunately. One can only try to mitigate that ...its all about the "years worth" !
    • Keep pedalling
    • By Keep pedalling 9th Jul 18, 9:32 AM
    • 5,196 Posts
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    Keep pedalling
    • #5
    • 9th Jul 18, 9:32 AM
    • #5
    • 9th Jul 18, 9:32 AM
    your main concern should be safety of the funds. You do not say what type of bonds but be wary that some of those outside of the mainstream institutions do not have FCA protection, and the capital may be at risk.

    In your situation I would not be chasing interest rates, and would place in the safest place for a large amount of money which is NS&I.
    Last edited by Keep pedalling; 09-07-2018 at 1:17 PM.
    • Keep pedalling
    • By Keep pedalling 9th Jul 18, 9:36 AM
    • 5,196 Posts
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    Keep pedalling
    • #6
    • 9th Jul 18, 9:36 AM
    • #6
    • 9th Jul 18, 9:36 AM
    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.
    Originally posted by Primrose
    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.
    • Primrose
    • By Primrose 9th Jul 18, 9:45 AM
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    Primrose
    • #7
    • 9th Jul 18, 9:45 AM
    • #7
    • 9th Jul 18, 9:45 AM
    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.

    We dont know what the position is in the case but the sale of the house could generate a fair sum and if the aunt lives for many more years, which is not an impossible thought given increasing longevity, several years of an accumulated ISA tax allowance could save money if she's a tax payer.
    • Malthusian
    • By Malthusian 9th Jul 18, 2:40 PM
    • 4,324 Posts
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    Malthusian
    • #8
    • 9th Jul 18, 2:40 PM
    • #8
    • 9th Jul 18, 2:40 PM
    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.

    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.
    Originally posted by Primrose
    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.
    • DairyQueen
    • By DairyQueen 9th Jul 18, 9:34 PM
    • 333 Posts
    • 497 Thanks
    DairyQueen
    • #9
    • 9th Jul 18, 9:34 PM
    • #9
    • 9th Jul 18, 9:34 PM
    We are also facing the 'where to invest' dilemma. My MIL's house in the process of being sold to pay care home fees. She is 88 and the sale will realise in the region of 750k. She will need around 35/40k p.a. on top of her pension to pay the fees. Given the size of the sum involved (my SILs have POA) I believe the family would be best-served approaching an IFA with expertise in this field. We were also considering an immediate needs annuity but have no idea how this would stack-up in terms of best value for MIL. She has capacity but hasn't a clue about investing as this is a case of a modest home owned for 50-something years in a recently-expensive location.

    I will be watching this thread closely and thanks to the OP and all contributors.
    • badmemory
    • By badmemory 10th Jul 18, 9:53 PM
    • 1,780 Posts
    • 2,411 Thanks
    badmemory
    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.
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