160k, what to do?

jasonparker

Hi all, a very close relative passed away a couple of months ago and I am due a lump sum out of the estate of around 160K.
I paid of my mortgage around five years ago and have around 11k already in a saving account.
Could someone please offer some advice on the best thing to do with the money? I'm looking either long term investment or maybe buy something like a quality stone cottage outright and rent it out, what would be best?
I also have two sons who are currently only ten years old but would like them to benefit from the estate when I'm gone, if I bought a house would I be able to put their name on the deeds? hopefully I will live more than another 7 years!!


Many thanks

[Deleted User]

What is your goal? Do you need to provide yourself with retirement income (how old are you? do you have any retirement provisions already?) or are you simply looking to maximize the value of the inheritance for when your children grow up? The best thing very much depends on what you need to achieve.

xylophone

I also have two sons who are currently only ten years old but would like them to benefit from the estate when I'm gone, if I bought a house would I be able to put their name on the deeds?

This would require a Trust on which specialist advice would be required.
http://www.hmrc.gov.uk/trusts/types/minors.htm

http://www.hmrc.gov.uk/trusts/types/index.htm

It would be possible to place any property into a settlor interested trust from which your sons could also benefit but again this would require expert advice. http://www.step.org/online-directory

If you do not choose to purchase a property but decide on investments you would need to look at your current financial situation and your long term goals.

Your children will have CTFs - would you wish to use some of the money to subscribe to them? https://www.gov.uk/child-trust-funds/overview

It is anticipated that CTFs will be transferable to JISA from 2015.

You might wish to consider using your ISA allowance (and your spouse's).

You might wish to contribute to your/your spouse's pension schemes.

You might wish to take advice from an Independent Financial Adviser if you are unsure how to proceed. http://www.unbiased.co.uk/

jasonparker

Thank you for the replies.
I'm 45 and don't have much of a pension to speak of, I've spent the last few years putting all my spare cash into paying the house off, I did not expect to be left this volume of money and its come as quite a surprise.
I work full time and have a reasonable income which I can live off quite comfortably and I am single. I don't need the inheritance money to provide me with an income at this time in my life at least so looking at long term investments and ideally leaving my boys set up for when I'm not here.

xylophone

I'm 45 and don't have much of a pension to speak of,

Does your employer not provide a pension? If not, he will soon have to. https://www.gov.uk/workplace-pensions

Or are you self employed?

It might be as well to think about a pension - here is the latest on the single tier state pension. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

I don't need the inheritance money to provide me with an income at this time in my life at least so looking at long term investments and ideally leaving my boys set up for when I'm not here.

Then see links in my previous post?

xylophone

ideally leaving my boys set up for when I'm not here.

You have an up to date will?

Nick_C

I would expect a lot depends on your tax situation. If you invested £160K, you could be looking at an income of around £8K per annum after tax, but only if you are a basic rate tax payer, and this additional £8K wouldn't take you into the next tax bracket. Additional tax would be due if you are in the higher tax bracket.

You can put almost £12K each year into a Stocks & Shares ISA, which protects you from additional income tax and capital gains tax.

Although the most tax efficient investment would be a pension scheme, this would not release the capital when you die. Investing the money now should give you a good supplementary income once you retire, while still leaving capital for you to pass on to your sons.

Personally, I wouldn't want the hassle of renting out a property. Repairs and Maintenance, possible arrears and difficult tenants, and CGT when you eventually sell. If you invest, you can probably avoid CGT altogether by making full use of your ISA allowance.

While you are deciding what to do with the money, make sure it is spread between a couple of different institutions to avoid going over the £85K protection limit.

jasonparker

Cheers everyone so far


My employer doesn't provide a pension and is currently trying to get out of the work place pension scheme, with 200 employees I reckon he has no chance!
My will is up to date.
I would be more than haapy with a 8,000 a year yield on my investment as I was thinking a 7,200 pre tax profit on a rental property.
Stocks and shares Isa sounds good, I could drip feed one on a yearly bases I presume?

simonfitba

jasonparker wrote: »

Stocks and shares Isa sounds good, I could drip feed one on a yearly bases I presume?

Yeah, you could put £11,520 into a S&S ISA before April 5 and £11,880 after April 5.

robatwork

jasonparker wrote: »

Cheers everyone so far


My employer doesn't provide a pension and is currently trying to get out of the work place pension scheme, with 200 employees I reckon he has no chance!

Ooops

http://www.thepensionsregulator.gov.uk/employers/what-happens-if-i-dont-comply.aspx

luvpump

xylophone wrote: »

Does your employer not provide a pension? If not, he will soon have to. https://www.gov.uk/workplace-pensions

Or are you self employed?

It might be as well to think about a pension - here is the latest on the single tier state pension. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf


Then see links in my previous post?

Any idea when ??