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£350K savings for care home fees
MumOf2
Posts: 612 Forumite
Any advice of any kind would be much appreciated. I'm used to getting a good return on smaller amounts but £350K is a bit daunting.
Background: father-in-law is 94 and is just about to go to live in a lovely residential home. All good and there's sufficient cash and income for four years' fees. The house is going on the market tomorrow and should realise £250K conservatively. So the question is where do we put the money?
It's too late to be investing. Each banking group has a £85K guarantee limit. We can do the usual - Santander, Lloyds club account, TSB, regular savers (incl. ISA from April) etc. - but that still leaves a heck of a lot of money sitting around not doing anything. Can't cash SIPP for tax relief because over 75.
We really don't want to keep the house and let it out - it's a three-hour drive from us and FiL is moving to a care home only 2 miles from our home. We don't want to be tied to a property that far away with no connections there any more. It's a bungalow and is showing all the usual signs of having been lived in by the same people for 45 years - it's obvious that it's a very old person's house and would need a lot of work to get it up to standard (personal and legislative) for letting. Also the philosophy of letting for income doesn't sit well with us - we'd rather someone else made it their own home.
So what to do to maximise income from the capital and safeguard the capital itself?
Any ideas?
And thanks to anyone reading this.
MumOf2
Background: father-in-law is 94 and is just about to go to live in a lovely residential home. All good and there's sufficient cash and income for four years' fees. The house is going on the market tomorrow and should realise £250K conservatively. So the question is where do we put the money?
It's too late to be investing. Each banking group has a £85K guarantee limit. We can do the usual - Santander, Lloyds club account, TSB, regular savers (incl. ISA from April) etc. - but that still leaves a heck of a lot of money sitting around not doing anything. Can't cash SIPP for tax relief because over 75.
We really don't want to keep the house and let it out - it's a three-hour drive from us and FiL is moving to a care home only 2 miles from our home. We don't want to be tied to a property that far away with no connections there any more. It's a bungalow and is showing all the usual signs of having been lived in by the same people for 45 years - it's obvious that it's a very old person's house and would need a lot of work to get it up to standard (personal and legislative) for letting. Also the philosophy of letting for income doesn't sit well with us - we'd rather someone else made it their own home.
So what to do to maximise income from the capital and safeguard the capital itself?
Any ideas?
And thanks to anyone reading this.
MumOf2
MumOf4
Quit Date: 20th November 2009, 7pm
0
Comments
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Any advice of any kind would be much appreciated. I'm used to getting a good return on smaller amounts but £350K is a bit daunting.
Background: father-in-law is 94 and is just about to go to live in a lovely residential home. All good and there's sufficient cash and income for four years' fees. The house is going on the market tomorrow and should realise £250K conservatively. So the question is where do we put the money?
It's too late to be investing. Each banking group has a £85K guarantee limit. We can do the usual - Santander, Lloyds club account, TSB, regular savers (incl. ISA from April) etc. - but that still leaves a heck of a lot of money sitting around not doing anything. Can't cash SIPP for tax relief because over 75.
We really don't want to keep the house and let it out - it's a three-hour drive from us and FiL is moving to a care home only 2 miles from our home. We don't want to be tied to a property that far away with no connections there any more. It's a bungalow and is showing all the usual signs of having been lived in by the same people for 45 years - it's obvious that it's a very old person's house and would need a lot of work to get it up to standard (personal and legislative) for letting. Also the philosophy of letting for income doesn't sit well with us - we'd rather someone else made it their own home.
So what to do to maximise income from the capital and safeguard the capital itself?
Any ideas?
And thanks to anyone reading this.
MumOf2
There is FSCS temporary high balance cover up to £1million for situations such as house sale, so no need to panic when the house sells.
NS&I products, while not the highest rate, have no £85k limit
With that amount you could also consider a ladder of fixed term accounts, keep enough for say 2 years in NS&I then have the rest in fixed rate accounts over 1, 2, 3 years etc
Do you have POA for dad in law?0 -
I agree, a ladder of 3 years*. You'll get a bit above 2%, dont worry about losses to inflation.
* post if you arent familiar with that.0 -
Do you have Power of Attorney for your father?
https://forums.moneysavingexpert.com/discussion/comment/75477442#Comment_754774420 -
Thanks, all, for your comments. LPAs (Finance and Health) are in the process of being prepared and registered with OPG - FiL isn't the type you would suggest this to until the latest crisis but all in hand now. In the meantime, my husband has third party mandates for the bank, PO and building society which is good enough for now.
I wasn't aware of the FSCS temporary high balance cover - thank you.
Ladder of fixed term accounts - again, I'm not aware of the term or how it works but intuitively I can understand it and will see how I can work it in practice. NS&I products - I've drawn up a list and we'll probably put most of the house capital in there, complete with £50K premium bonds to take a flyer - someone has to win big and you never know...
On my current calculations, we can make about £7K in interest a year so a tax return will need to be completed with 20% tax on the interest (less the £1,000 allowance). I'm looking after the finances so will make sure all this is kosher with HMRC. We'll also make use of ISA allowances to maximise non-taxable income.
Will is in place, DNAR form being drawn up, LPAs being prepared, house utility providers are being really good and talking to my husband even though he isn't the account holder, pre-paid funeral is being transferred to undertakers local to us.
And the amazing thing is the items of long-lost jewellery and cash found in the house. It's all rather sad really.
Thanks again to you all.
MumOf2MumOf4Quit Date: 20th November 2009, 7pm
0 -
Just in case your intuition doesn't work, re the ladder.
Initially you take out 1,2 and 3 year fixed period savings nominally for 1/3 the total amount each.
1 year later when the 1 year expires, take out a 3 year.
Next year, when the 2 year expires, take out another 3 year.
From that point on you have a 3 year expiring every year, as if you had 1 year fixed savings, but you are getting 3 year rates.0 -
Thanks, Another Joe, I can see how that will work and we can always cash in one as it matures to release sufficient funds for the next year's fees. Really well explained. Much appreciate the explanation
MumOf2MumOf4Quit Date: 20th November 2009, 7pm
0 -
I wasn't aware of the FSCS temporary high balance cover - thank you.
See https://www.fscs.org.uk/your-claim/temporary-high-balances/0
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