Future care costs plan - sanity check?
Posted: March 11th, 2023, 6:01 pm
My father recently died. The income she is left with (state pension + widows increase, some rent) may amount to perhaps a third to a half of her current (pretty low) expenditure. But I will be doing a proper estimate of that in due course.
She is in relatively good health - she may be around for another 10 years or so. And she has some fairly substantial liquid assets. But the wild card is of course care costs over time.
There are some reasons to re-jig her current finances (she's paying almost 3% in fees for her investments with the dreaded St James Place, for one thing). I also haven't thought much about her rental property income and whether she should sell up and use that instead in some way (being a land lady at 83 is not a good idea). But there would be tax issue with that, I assume. Another potentially "interesting" thing is that my father has a NRBDT in his will, which may or may not be a consideration (I need to talk to his solicitors about that anyway).
But my question is that in order to have, as it were, a maximal war chest for future costs, might she re-jig her share portfolio (most of which are accumulation funds in an ISA) so that it starts producing income to make up her current shortfall? A couple of investment trusts, for example.
Her residual assets can then go into growth investments (eg a broad-based ETF of some kind) in the hope that it will grow over time. With some cash set aside for the odd discretionary expense, she can then start eating into the accumulation part when the care costs hit, and those might see her out.
Or is that all too over-complicated?
She is in relatively good health - she may be around for another 10 years or so. And she has some fairly substantial liquid assets. But the wild card is of course care costs over time.
There are some reasons to re-jig her current finances (she's paying almost 3% in fees for her investments with the dreaded St James Place, for one thing). I also haven't thought much about her rental property income and whether she should sell up and use that instead in some way (being a land lady at 83 is not a good idea). But there would be tax issue with that, I assume. Another potentially "interesting" thing is that my father has a NRBDT in his will, which may or may not be a consideration (I need to talk to his solicitors about that anyway).
But my question is that in order to have, as it were, a maximal war chest for future costs, might she re-jig her share portfolio (most of which are accumulation funds in an ISA) so that it starts producing income to make up her current shortfall? A couple of investment trusts, for example.
Her residual assets can then go into growth investments (eg a broad-based ETF of some kind) in the hope that it will grow over time. With some cash set aside for the odd discretionary expense, she can then start eating into the accumulation part when the care costs hit, and those might see her out.
Or is that all too over-complicated?