PoA with 500k to manage

[notquiteruralbliss]

I have PoA for a friend who will be moving into a specialist care home. Their house has been sold and there is now £500k sitting in their current account. Care home fees will be around £100k a year. What should I do with the £ to preserve its value / make it last as long as possible?

I've known people buy a insurance which pays for future fees when they've got a lump sum. Where you get such independent advice though I'm not sure.

I think it would definitely be something to take specialist advice upon. If it’s as simple as having it available to pay care fees as long as possible (and I’m not sure it would be that simple) then spreading it around some high interest accounts with a plan for withdrawals would seem to be reasonable. There’s no point taking any risk with it given the timeframe. Maybe using National Savings for simplicity so you can put more in without putting the capital at risk.

As POA, you are obliged to act in their best interests so need professional advice. Not the advice from randoms on a parenting forum.

Quite,

BUT there are quite a lot of 'inflation beating' fixed rate accounts on offer at the moment.

Also of course and I have no idea what their prognosis is but what is there likley life expectancy and who are the remaindermen who pick up whatevers left?

Clearly if they are not likley to live long any issue about what to do with the money to preserve its value is irrelevant.

Take proper advice from a member of the Society of Later Life Advisers.

Broadly, your options are to either use some of the capital to buy an Immediate Care Needs annuity to give a guaranteed secure income stream for the rest of your friend's life, or else to carefully manage the capital but pay fees directly from that plus any pension income they may have.
With a back-up plan of what to do if the money runs out.

I asked here because I thought there may be posters who had been in a similar position or who had had to invest a similar amount as a trustee.

As far as I am aware, my responsibility as PoA is solely to my friend while they are alive, not to anyone who may inherit. It is possible that, whatever I do, the £ will run out at some point. By then, my friend's condition may be such that they are entitled to CHC funding. If not the LEA will need to fund the complex care needed. There is no other backup plan because there are no relatives who can step in and fund care.

I like JohnofWessex's suggestion re finding the best fixed rate accounts. It would be relatively simple. And AuntyJoice's suggestion re National Savings sounds a good first step as then the £ would at least be safe. I will look up the 'Society of Later Life Advisors' but don't think any of the financial 'products' aimed at elderly people in care will work for my friend as they are a physically well, comparatively young person, with early onset Alzheimer's.

I would (and do) keep it in a savings account, with enough kept in a current account to pay for day to day expenses like toiletries, flowers, magazines, bits of equipment or furniture, clothes, food treats, haircuts, podiatrist visits, tax bills etc.

It seems unlikely to me that buying an annuity of that amount would definitely cover the fees, but obviously check. My impression was that there weren't many available any more but that could have changed.

The interest will probably be enough to trigger a tax payment over a year for a while, so do talk to HMRC about that. I was amazed and grateful that DM got a simple assessment that they did, but I had tried to register her for self assessment so perhaps that was needed.

100000 a year in care home fees?
That’s really at the top end!
I presume it’s a specialist care home?

I would seek financial advice as that 500k needs to work hard to continue to pay for care

Does the person still have capacity? If so, it’s for them to decide, not you, I think . (This may need checking).

Update - sorry, I’m wrong. You can make decesions providing the PoA gives you permission to.

https://www.citizensadvice.org.uk/family/looking-after-people/managing-affairs-for-someone-else/#:~:text=Property%20and%20financial%20affairs%20lasting,welfare%20benefits%20or%20tax%20credits

You sound like a great and caring friend OP.

You can speak to their bank and see what accounts they have, they may have a high interest account if you dont make any withdrawals that month which you could put a lump sum into, plus a lump sum into their current account for care fees, any bills etc, do they have any money coming in like pension, benefits, funded nursing care.

Importantly, it at least needs splitting across accounts- the money is not protected over £85,000in any one bank/building society.
I had to split my mum's money early on (till care fees solved that!) and put what I thought was reasonable into a one year fixed thing though leaving enough not in it in case care needs increased and cash needed urgently. I tried to do things she would have generally done earlier in life but also protecting her assets. I explained everything I did do to her, she was pretty much all there in many ways but didn't have much clue re bills etc. She was at home with a care package.
However, there was not nearly as much as you have and a financial advisor seems best - I really disliked having to manage such financial affairs, it worried me as well - and maybe some outside advice would take pressure off.