Best Pensioner Investment of £100k
Discussion
My 80+ parents-in-law are sorting out some investments and have £100K to put away.
Not fussed about instant access, fairly risk adverse, low-ish arrangement fees.
What does the PH collective suggest looking at. They are currently talking the Skipton, but there fees seem high when compared to others.
Any FA's in the Lancashire that would be willing to work with them based suggestions here?
Thanks
V (and Mrs V)
Not fussed about instant access, fairly risk adverse, low-ish arrangement fees.
What does the PH collective suggest looking at. They are currently talking the Skipton, but there fees seem high when compared to others.
Any FA's in the Lancashire that would be willing to work with them based suggestions here?
Thanks
V (and Mrs V)
VEX said:
Thanks Darreni,
Just found out they did have the money in a 50% HSBC managed fund and 50% in an account that fed into joint ISAs.
So not that risk averse then!
V
Strange how people say they are risk averse & then you find that they are up to their neck in shares/equity funds!Just found out they did have the money in a 50% HSBC managed fund and 50% in an account that fed into joint ISAs.
So not that risk averse then!
V
Edited by VEX on Sunday 3rd August 18:11
Do they know exactly what they are invested into?
Quinny said:
I've just put a little bit of money away with "Kaupthing Edge"
6.55% Instant access or if you want to tie it up for a year 7.15%
Also check out Bimingham Midshires. They have some good rates at the moment
Kaupthing are perceived to be quite a risky bank - market is pricing in a relatively high chance of default.6.55% Instant access or if you want to tie it up for a year 7.15%
Also check out Bimingham Midshires. They have some good rates at the moment
Vex,
Do they want an income off it, or do they want to preserve and grow the 100k? Also, what are their thoughts towards estate planning and IHT implications? With respect, might it be an idea to consider that?
With regards to risk, attitude to risk and aversion to risk are 2 different things..
Do they want an income off it, or do they want to preserve and grow the 100k? Also, what are their thoughts towards estate planning and IHT implications? With respect, might it be an idea to consider that?
With regards to risk, attitude to risk and aversion to risk are 2 different things..
Thanks all
They are looking to preserve and grow the 100K, they don't need any income off it.
In terms of IHT etc I don't think it has really been thought about, although you mentioning it will make us mention it. Your right it does need to be included.
This all triggered off them moving money around to so that they had less than the 35K in all their accounts and the people at The Skipton pick up on other moneys and offered them and FA.
Ideally they should have their own IFA doing some good Wealth Management for them, but being older and ultimately more trust worthy they are happy being led. Although they do at least listen to their daughters.
Any IFA in Lancs / Blackpool that could help out / work with them?
V.
They are looking to preserve and grow the 100K, they don't need any income off it.
In terms of IHT etc I don't think it has really been thought about, although you mentioning it will make us mention it. Your right it does need to be included.
This all triggered off them moving money around to so that they had less than the 35K in all their accounts and the people at The Skipton pick up on other moneys and offered them and FA.
Ideally they should have their own IFA doing some good Wealth Management for them, but being older and ultimately more trust worthy they are happy being led. Although they do at least listen to their daughters.
Any IFA in Lancs / Blackpool that could help out / work with them?
V.
Edited by VEX on Sunday 3rd August 22:31
VEX,
I don't wish to sound insensitive, but IHT should be considered mainly because it is the recipient who has to pay it! If your iLs don't want to gift the money or rely on living for 7 years in order to mitigate any tax due, is it likely that you will have an idea what their intentions are with regards to disposal of it?
If (forgive me for being blunt) you're going to get the money, it might be possible to work out how much IHT might be liable. In this instance, you can set up a Non-profit Whole of Life Insurance policy set to pay an amount equal to the IHT due. Place it in trust so that it is paid as soon a spossible. If it is kept within the estate, then matters drag out when you really should be concentrating on probate instead of going to the bank manager and arranging a bridging loan at a shocking rate. They are very simple, and you can contact a life office direct to save fees. You can even establish a Trust for it quite easily, if you want to.
Thats all very simplistic, but if you have any snags or questions, don't hesitate to drop me a PM.
Regards,
a
I don't wish to sound insensitive, but IHT should be considered mainly because it is the recipient who has to pay it! If your iLs don't want to gift the money or rely on living for 7 years in order to mitigate any tax due, is it likely that you will have an idea what their intentions are with regards to disposal of it?
If (forgive me for being blunt) you're going to get the money, it might be possible to work out how much IHT might be liable. In this instance, you can set up a Non-profit Whole of Life Insurance policy set to pay an amount equal to the IHT due. Place it in trust so that it is paid as soon a spossible. If it is kept within the estate, then matters drag out when you really should be concentrating on probate instead of going to the bank manager and arranging a bridging loan at a shocking rate. They are very simple, and you can contact a life office direct to save fees. You can even establish a Trust for it quite easily, if you want to.
Thats all very simplistic, but if you have any snags or questions, don't hesitate to drop me a PM.
Regards,
a
Quinny said:
Not at all, they're no more risky than a uk bank.
They're part of the UK Financial Services Compensation Scheme (FSCS).
So up to £35k banked with them is no more risky than it is with say the Abby National.
Each parent could invest £35k in 2 seperate accounts, if they wanted
http://www.moneysavingexpert.com/savings/safe-savi...
So you are confident that the FSCS scheme has been tested and that it pays out promptly? When was it last used in anger?They're part of the UK Financial Services Compensation Scheme (FSCS).
So up to £35k banked with them is no more risky than it is with say the Abby National.
Each parent could invest £35k in 2 seperate accounts, if they wanted
http://www.moneysavingexpert.com/savings/safe-savi...
Edited by Quinny on Sunday 3rd August 21:23
Quinny said:
NoelWatson said:
Quinny said:
Not at all, they're no more risky than a uk bank.
They're part of the UK Financial Services Compensation Scheme (FSCS).
So up to £35k banked with them is no more risky than it is with say the Abby National.
Each parent could invest £35k in 2 seperate accounts, if they wanted
http://www.moneysavingexpert.com/savings/safe-savi...
So you are confident that the FSCS scheme has been tested and that it pays out promptly? When was it last used in anger?They're part of the UK Financial Services Compensation Scheme (FSCS).
So up to £35k banked with them is no more risky than it is with say the Abby National.
Each parent could invest £35k in 2 seperate accounts, if they wanted
http://www.moneysavingexpert.com/savings/safe-savi...
Edited by Quinny on Sunday 3rd August 21:23
The only safer options, as they're bankrolled by the government are Northern Rock and national savings, Both paying crap rates.
The only concern I would have with an elderly couple taking out an Investment Bond (especially if they don't need an income) is that there are likely to be penalties if its cashed early for whatever reason. If an income is needed though, 5% pa may be withdrawn from the fund.
Its not particularly tax efficient either, so if the capital going in has already been subject to tax, it could produce earnings which again, are subject to taxation. For tax purposes unit linked bonds are treated as if basic-rate tax has already been deducted which can make them unsuitable for non-taxpayers or 10% tax-payers (which may be the case in this instance), since the tax cannot be reclaimed. Someone who doesn't pay tax shouldn't take out an IB as the owner is not able to reclaim the 10% tax.
It may sound defeatist but for many a senior couple, the greatest justice they can attach to any savings is to mitigate any potential IHT they might incur and think about estate planning.
Its not particularly tax efficient either, so if the capital going in has already been subject to tax, it could produce earnings which again, are subject to taxation. For tax purposes unit linked bonds are treated as if basic-rate tax has already been deducted which can make them unsuitable for non-taxpayers or 10% tax-payers (which may be the case in this instance), since the tax cannot be reclaimed. Someone who doesn't pay tax shouldn't take out an IB as the owner is not able to reclaim the 10% tax.
It may sound defeatist but for many a senior couple, the greatest justice they can attach to any savings is to mitigate any potential IHT they might incur and think about estate planning.
haworthlloyd1 said:
don't take this as financial advice but something like an investment bond with hbos may be good as there are no arrangement or exit fees and also there is a guaranteed death benefit - eg if you invest 100k and when they die the investment is worth 80k you still get back 100k. if when they die it is 130k you get 130k
also if they go into care and they didn't do it to deliberately get around care home fees then it wont be assessed whereas their property and cash in the bank would do
need to do some research or get a good adviser
Sorry are you saying that Monies tied up in Investment Bonds are not counted as Captial or an Assest if someone needs to go into care?also if they go into care and they didn't do it to deliberately get around care home fees then it wont be assessed whereas their property and cash in the bank would do
need to do some research or get a good adviser
The value of a single premium life bond isn't taken into account for the Council Means Test, as Lloydy says, because its a life policy. Some bonds however, only have a nominal amount of life cover, so check first.. it might not even be worth it.
Secondly, there is a principle called 'deliberate deprivation'. If you place capital or assets into an arrangement with the specific purpose of avoiding a Means Test just before applying, they may fall back 'in' the amount which may be considered. So if you conduct the arrangement a long time before applying for care at public expense, you'll probably be ok.. but just before? Forget it.
There is a legal precedent too (link below), so be careful. The Regs (also link below) do accept that not all arrangements are driven by a desire to avoid long term care costs, but the timing of the transfer is relevant, and they state:
‘The timing of the disposal should be taken into account when considering the purpose of the disposal. It would be unreasonable to decide that a resident had disposed of an asset in order to reduce his charge for accommodation when the disposal took place at a time when he was fit and healthy and could not have foreseen the need for a move to residential accommodation’.
There is a cop out. Many local authorities have a view that ALL older people ought to be considering that they might need long term care in the future, so they will count any money given away as part of a person's assets, unless there is another strong reason for giving it away (for example to avoid inheritance tax). This 'motivation' test can catch individuals who want to make use of investment bonds, as Lloydy says - a commonly advised course of action), since the guidelines also state that:
'Councils are advised that if an investment bond is written as one or more life insurance policies that contain cashing-in rights by way of options for total or partial surrender, then the value of those rights has to be disregarded as a capital asset in the financial assessment for residential accommodation'.
http://www.dh.gov.uk/en/Publicationsandstatistics/...
http://www.scotcourts.gov.uk/opinions/P71799.html
http://www.ageconcern.org.uk/AgeConcern/fs40.asp
Secondly, there is a principle called 'deliberate deprivation'. If you place capital or assets into an arrangement with the specific purpose of avoiding a Means Test just before applying, they may fall back 'in' the amount which may be considered. So if you conduct the arrangement a long time before applying for care at public expense, you'll probably be ok.. but just before? Forget it.
There is a legal precedent too (link below), so be careful. The Regs (also link below) do accept that not all arrangements are driven by a desire to avoid long term care costs, but the timing of the transfer is relevant, and they state:
‘The timing of the disposal should be taken into account when considering the purpose of the disposal. It would be unreasonable to decide that a resident had disposed of an asset in order to reduce his charge for accommodation when the disposal took place at a time when he was fit and healthy and could not have foreseen the need for a move to residential accommodation’.
There is a cop out. Many local authorities have a view that ALL older people ought to be considering that they might need long term care in the future, so they will count any money given away as part of a person's assets, unless there is another strong reason for giving it away (for example to avoid inheritance tax). This 'motivation' test can catch individuals who want to make use of investment bonds, as Lloydy says - a commonly advised course of action), since the guidelines also state that:
'Councils are advised that if an investment bond is written as one or more life insurance policies that contain cashing-in rights by way of options for total or partial surrender, then the value of those rights has to be disregarded as a capital asset in the financial assessment for residential accommodation'.
http://www.dh.gov.uk/en/Publicationsandstatistics/...
http://www.scotcourts.gov.uk/opinions/P71799.html
http://www.ageconcern.org.uk/AgeConcern/fs40.asp
In all fairness, if they are already into their 80s there is unlikely to be much to be gained from IHT planning unless they start making some gifts asap. Depending on whether the estate is likely to be subject to IHT or not, deposit based savings are likely to be most appropriate - for security, ease of access and also for a certain return - which is something that has become difficult to say for other asset classes.
Gassing Station | Business | Top of Page | What's New | My Stuff