How do I make my inheritance safe from unfaithful husband

bowlhead99

polymaff wrote: »

If that's the timescale, better to put it into the three-year product and pay the penalty?

Depends on your tax rate and when it is you actually want to cash it in.

Imagine you deposit £1000 ; after a year you have earned £13 net of high rate tax by using the 3 year product (2.17% gross) or £8.80 net of high rate tax by using the one year product (1.47% gross). So after that year, when the one year product naturally matures, you can afford to pay about £4.20 of penalty if you need to exit the longer term product early.

However, a penalty charge of 90 days interest on something that pays 2.17% is going to be over £5, which is more than you can spare if you only have an extra £4.20 in the kitty.

It can be a pain working out all the permutations of what terms and penalties are available, and even with relatively shorter fixes there is always the chance that prevailing market rates will move in the market and you won't want to be stuck on a low rate. So when suggesting easy products to use I generally don't bother looking at all the terms longer than people want and doing the maths for them "just in case".

The point was really just that the Direct Saver, though a 'safe bet', was beaten by at least two easy products. If the OP wanted to give me the £500 she was quoted by "a financial company" to look at options, I might take more interest.

Haha, 'take more interest'. I made a funny.

Mr_Costcutter

Some excellent advice to which I can't add. However, I would like to pass on my best wishes to you, and hope that the future is a lot kinder.

bowlhead99

Snakey wrote: »

Depending on what the housing market's like in the place you plan to buy (and on how definite those plans are, of course), you could maybe buy the house now and rent it out so that it's there when you are ready to move?

Isn't the issue that until all the finances are sorted post divorce, she doesn't know exactly what her financial situation will be?

It would seem a bit reckless to guess how much money you'll have and then go and spend it right now in the hope you get it right. Especially when buying a property now might incur an extra layer of stamp duty for it being a second home (assuming they already have a matrimonial one)

You don't want to be putting all that cash in the stock market for such a short time/

I'd replace "all that" with "any of that", if up to 100% might be needed to buy property or for other arrangements

but equally the rate of return you'll get from savings accounts is way below inflation.

Well, you don't know what inflation will be over the next year, only what it was over the last year. If NS&I pay double the BoE base interest rate for instant access or about triple the base rate on a one year fix, they are pretty much the main practical choices unless you really want to use 8+ accounts. There is probably more things in life to focus on at the moment than trying to eke out another bit of a percent. A year or two isn't too long to put the interest-maximizing quest on hold for a bit, in pursuit of an easy life.

I agree with your other comments though.

Lizabeth21

Hi OP,
I am same age as you and been married 30 years. I can’t imagine being in your position. I can’t help with the financial stuff but just wanted to say I feel for you and hope things turn out as you would like.

Snakey

Fair enough, B. I'd assumed that her expectation was that she'd have at least £650k (of inheritance) plus half of whatever was left from the marital assets once the dust settled, and planned to spend some/most of the £650k on a house. In most of the country you could take your pick of family homes for that money, although there's a chance she's in London where it might only get you a two-bed flat and so you would need to wait so you could copper up from the entire settlement (or move).

And of course you are right about the SDLT. I forget what the time limit is for buying a new residence before the old one is sold (and I'm not sure that works if you rent it out in the interim) but at the very least it would be a cash-flow disadvantage.

At 51, if her kids are still young she's probably got (or given up recently enough to pick it back up again) a career of her own and hopefully a half-decent pension, so at least the capital won't have to also stretch to subsdise a low income.

polymaff

bowlhead99 wrote: »

Depends on your tax rate and when it is you actually want to cash it in.

Imagine you deposit £1000 ; after a year you have earned £13 net of high rate tax by using the 3 year product (2.17% gross) or £8.80 net of high rate tax by using the one year product (1.47% gross). So after that year, when the one year product naturally matures, you can afford to pay about £4.20 of penalty if you need to exit the longer term product early.

However, a penalty charge of 90 days interest on something that pays 2.17% is going to be over £5, which is more than you can spare if you only have an extra £4.20 in the kitty.

It can be a pain working out all the permutations of what terms and penalties are available, and even with relatively shorter fixes there is always the chance that prevailing market rates will move in the market and you won't want to be stuck on a low rate. So when suggesting easy products to use I generally don't bother looking at all the terms longer than people want and doing the maths for them "just in case".

The point was really just that the Direct Saver, though a 'safe bet', was beaten by at least two easy products. If the OP wanted to give me the £500 she was quoted by "a financial company" to look at options, I might take more interest.

Haha, 'take more interest'. I made a funny.

You're scraping the bottom of the bowl - see, I can pun, too - by putting a case where no allowances are, and no BRB is, available - and by implying that the predicted closure date (somewhere in 2019, remember?) is twelve months away. Hardly representative of the case outlined by the OP or of a typical circumstance.

Oh, and you've misquoted an interest rate.

Not your finest hour, BH

dealer_wins

Be careful that the company you want to use arnt scammers!

CatLady13

I forgot to say, if you do buy any premium bonds then do so after the divorce is final just in case you win and have to split the winnings...

kidmugsy

The status of your inheritance may depend on whether you will be using Scots Law or English Law for your divorce. Scots Law seems (to my eye) usually to be more rational.

bowlhead99

polymaff wrote: »

You're scraping the bottom of the bowl - see, I can pun, too - by putting a case where no allowances are, and no BRB is, available

The person in question presumably already has some income including interest income as the average well-off 51-year-old usually does. So, there may be no spare allowances or basic rate band. We know nothing about the person really other than what they have told us.

What we do know is that the person has at least £650k of spare cash which they are looking to deposit to earn savings interest - and so whether they are earning 1% on it, or 1.5% on it, or 2% or more, they are well in excess of the personal savings allowance whether their circumstances mean that allowance is £500 or £1000 or £0, so there is little point bringing the personal savings allowance into it at all, for example.

- and by implying that the predicted closure date (somewhere in 2019, remember?) is twelve months away. Hardly representative of the case outlined by the OP

The OP is going through a divorce process and expects to eventually emerge out the other side of that process, and be ready to purchase a house at some unspecified date in 2019.

2019 is less than 370 days from now, so a 365-day product seems appropriate and not too long of a term
- it is a term maturing before the money is needed.
-But it pays more interest than instant access ; instant access is not needed, at least not for all of it.

So, the product can be suitable for the case outlined by the OP.

I don't know how you can say that is 'hardly representative of the case outlined by the OP' ; because the OP expects to use the money at some unspecified date during a year which starts in the next 370 days and I have suggested "...so could presumably use the Guaranteed Income Bonds at 1.45% for a one year fix.". Is that a wildly stupid suggestion on my part and 'hardly representative' of her needs? Too short a term? Not a long enough term? Sounds fine to me.

I am only saying she could use it. I am not even suggesting she uses it for all the money - she may want to put down a deposit for the 2019 purchase during 2018, or her plans may accelerate substantially depending on how the divorce process goes financially or emotionally and she'll want to crack on with her life. We do not know.

Oh, and you've misquoted an interest rate.

Yes, I had the gall to produce some calculations in which I said the 1-year guaranteed income bond rate was 1.47%, working from memory, where the actual rate being offered is..... 1.46%.

Feel free to rerun the numbers. 1.46% after 40% tax is 0.876% or 88p per £100. Whereas 1.47% after 40% tax is 0.882% or 88p per £100. In my example I used £8.80 per £1000.

Not your finest hour, BH

Despite it not being my 'finest hour' I am sure there is nobody that was misled by my post, given the numbers are materially unchanged and the conclusion is unchanged with the corrected interest rate.

Of course, we cannot always be in our 'finest hour' as we have to occasionally put in some mundane hours to help the really fine ones stand out.