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Post by davee39 on Aug 7, 2015 21:24:15 GMT
I am looking into investment options on behalf of a relative to cover care home fees. We have a power of attorney registered but I have no experience using it.
Has anyone had any luck, or perhaps advice, on where this might be accepted to get reasonable returns. I thinking of around 3%. Money in the bank currently earns a generous 0.05% because we were instructed to leave it alone.
Thanks
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pom
Member of DD Central
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Post by pom on Aug 17, 2015 10:06:00 GMT
You have my utmost sympathy...
I think a lot will depend on whether you're dealing with an Enduring or Lasting - a few people I dealt with certainly implied that things would have been a lot more straightforward had I been using a Lasting, but really I suspect that was an excuse.
I didn't get any further than the traditional options, as my initial focus was on first making sure on maximising bank interest so as to have sufficient funds fully FSCS protected but also liquid for both care fees and future IHT bills, and ended up in probate before managing to free up extra cash from any of the property anyway, at which point I may have started looking at higher risk stuff. But based on what I found just with banks/stocks & shares my advice would be that nothing is consistent, every organisation will have different processes, some of which may or may not work for you... some of them will say it work and then it just doesn't. I ended up with a nice little sideline in complaints/compensation but rather more grey hairs.
So I think you'll just have to identify potential targets and then contact them in turn to enquire as to their version of the process. Although a lot will also depend on how firmly and in what manner you've been instructed to "leave it alone," the current mental state of the donor etc etc.
Happy to give further advice if I can (apols, didn't see this thread before else I'd have jumped in sooner)
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james
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Post by james on Sept 8, 2015 1:16:46 GMT
It's possible to use investments like P2P or equities with POA, depending on the life expectancy and needs. Typically care home needs last no more than two or three years before death but that depends on why the care home is needed. That sort of timescale makes equities inappropriate, and given the bond markets at the moment, so are corporate or government bonds. it is possible to select P2P options with suitably short loan durations and/or secondary markets with high liquidity to do the job. Avoid places that have neither security nor protection fund because those could last a long, long time after death, notably say a consumer loan under an IVA. Secondary markets that allow selling of loans with late payments (or protection funds that take over the loan) are preferred because you can sell a loan before it defaults, maintaining liquidity for the eventual estate.
To protect against the long life case there is a product type called the immediate needs annuity. Because of the typically low life expectancy these pay out at quite high rates for an annuity, even though like all annuities on average the person wouldn't get back all they spent to buy it. It's the protection against long life that can make this worthwhile.
Most P2P firms probably won't be familiar with the rights and identification processing for PoA cases so you'd have to be patient while they sort it out. The same can apply even to ordinary bank and savings account providers. No harm to tell the P2P priovider what the purpose is, that life expectancy is whatever and seek their thoughts on what clases of loan to avoid to maintain liquidity at a desirable level.
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