Ask the expert: paying for care home fees

Funding the cost of long-term care fees for relatives can be a stressful proposition. What are your options?

Q. My mother who has Alzheimer’s is currently living in a care home. I have power of attorney and have recently had to sell the family home in order to continue to pay for her care-home fees. This realised just over £130,000.

Although I will transfer most of this to a deposit account, would it be ethical for me to use some of the money to purchase premium bonds in her name, give the current low rates of interest. Mum does not pay any income tax as she only receives a state pension.

Carl Lamb, Managing Director of Almary Green:

A. It’s the duty of a power of attorney to protect the interests of the person whose affairs they are administering and that generally means making investment decisions that don’t put the individual’s capital at risk. There has been guidance from a senior judge about a power of attorney’s approach: the judge urged powers of attorney to consider suitability and diversification (so spread any risk), to use products and accounts that are regulated by the industry watchdog, the FCA, and to get proper financial advice.

The guidance also recommends that powers of attorney move assets into cash investments as the individual gets older. Cash investments – for example, bank and building society accounts and cash ISAs – carry a lower level of risk than most equity based investments. Investments from NS&I are also recommended as they are government backed, so Premium Bonds and NSI Certificates (when available) are perfectly acceptable as investments made by a power of attorney.

So, yes, by all means invest in Premium Bonds on behalf of your mum. They are a safe investment, they have no withdrawal penalties and, who know, she may even win the (tax-free) jackpot!

>>>Read more about long-term care

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About the author

Carl Lamb Founder and Managing Director of Almary Green Investments Ltd, Carl is passionate about delivering a quality service to clients.

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