Large inheritance, and I don't know what to do!

Matt5_2

Hi all.

I suspect this may be a rather odd post. I'm an only child, I lost my mother a couple of years ago, and earlier this year I sadly lost my last grandparent on my mother's side. My mother herself was an only child also, so aside from a specified beneficiary payment in my late grandmother's will to my father, I have inherited her entire estate. To cut a long story short, after all liabilities and disbursements I stand to inherit a few hundred thousand pounds, an obscene amount of money as far as most would be concerned I know.

My grandmother left a relatively simple estate, and truth be told, I wasn't expecting matters to be tied up as soon as they are, however a couple of weeks ago probate was granted, and within a few weeks my solicitors have collected the substantial liquid assets and are now at the point where they want to make an interim payment for the majority of those assets to me.

I've been so muddled up with dealing with matters, and in all honesty coming to terms with the loss of someone who was a massive importance in my life that I've made no provisions for this whatsoever. From stories I'd heard off people I was expecting this process to take well over 12 months.

I live a relatively simple life. I have a modest mortgage, a steady job that I enjoy, and I don't really 'want' for much in my life. I accumulated some debt when I was younger but that's all settled. I don't know what to do. This doesn't feel like the right time to be doing this, but it's happening anyway. Ofcourse I plan to pay off my mortgage, maybe me and the other half might move to a little larger property, possibly a detached house in time, but we are happy in our life, we don't wish to move to a massive house, or by flashy cars and things etc.

All I have right now is a current account, and a savings account. I know that the solicitors are about to transfer me a substantial amount of the aforementioned sum, but other than to put it into my basic everyday saver, I don't know what to do. Will such a large amount of money be safe and okay in there whilst I figure out how to deal with it, and probably seek advice on the best way to manage it?

I was very dubious about posting this thread. I'm concerned how it will come across. I don't want to come across as an 'entitled rich person', I'm a very grounded person, still relatively young and in a position through circumstance that I'd never expected to be in, certainly not at this point in my life.

Any help or advice would be greatly appreciated.

CatLady13

Condolences on your losses.

In your situation, I would get the money transferred into NS&I Income Bonds and leave it there while you mull over how best to use it. The money will be safe under FSCS protection for 6 months in your bank but you won!!!8217;t earn much interest on it in an everyday saver. I would give yourself time to deal with your grief and get clear headed about how to proceed next.

You will probably get people asking how much is left on your mortgage, your current LTV, and what rate you have as you might be better off not paying it off. If you want peace of mind by paying if off then that is up to you.

Pension plans are another consideration. But for now, I would just set it aside in NS&I (it will be protected up to £1million so it is perfectly safe), earn a bit of interest from it, and ponder it when you are up to it.

george4064

You need to have a proper think about what your financial objectives are, but if for example you think you won't need the money (or at least some of it) indefinitely or at least no sooner than 7 years, then you should seriously consider investing that money.

Whilst investing is riskier than simply sticking it in the bank, it will also provide a greater return and therefore will be working harder for you. Since you don't need this money you can afford to take on this risk and ride out any falls.

I also recommend you consider the following tax efficient wrappers for your investments: Stocks & Shares ISA and a SIPP. (Not sure if you have either already...

I have copy and pasted some text I've used before which explains a bit about things to consider before investing; (You might want to skip 1 and/or 2 if you've already done them!)

1. Establish an emergency fund This should be a few months of your total expenditure in an instant access account. MSE have a good list of savings accounts here: http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

2. You may want to exhaust the available banks in the link above with more cash you have.

3. You might want to allocate some money to investments. This will have risk involved but remember that the potential returns are much higher here as you are taking a bit of risk. With investments diversification is the key, so consider global funds (think of having a finger in every pie, but in terms of investments all over the world!)

There is a huge range of global funds out there, but here are some popular ones:

- Vanguard LifeStrategy 60% (this is also available at 100%, 80%, 40% and 20%)
- L&G Multi Index Funds (similar to Vanguard they have a range of funds with different levels of risk and potential return)
- HSBC Global Strategy Funds (again they have a range of these a set above)

You will also need to select an investment platform, whether it be for your ISA or SIPP. I personally use AJ Bell YouInvest who have been great, but note that there isnt a perfect platform for everyone. Also its important to remember that the cheapest platform isnt necessarily the best, the saying you get what you pay for certainly holds true with investment platforms. Here is a good website that compares platforms and their costs: http://monevator.com/two-ways-to-help-you-find-the-best-online-broker-or-investment-platform/

Good luck!

ValiantSon

There is no reason to rush into anything. As CatLady13 says, the money is safe in your current account for six months, but it makes more sense to move it to NS&I where it will be fully protected for as long as you wish to leave it there.

You can take your time. Grieve. When you are ready to start thinking about the longer term then I suggest looking at how you can use the money in a pension, to ensure your own - and your wife's - financial security in retirement.

For the present, perhaps the only thing to think about is paying off your mortgage. Personally, I think it best to remove that burden from your shoulders and secure your future. Others will come on and try and work out if you could perhaps use the mortgage debt as leverage on investments. If you want to jump into that world then that's your choice, but I would clear the mortgage and, when you are ready, start from that point of security.

Ask more questions, once you have had time to assimilate the significant change in your life (both emotional and financial).

I wish you well.

CatLady13

For what it is worth, I was in a similar situation but without a regular income and paying my mortgage off was one of the first things I did. It was horrible seeing all that money leaving my account but it was worth it for the security. I have a roof over my head and no one can take that from me. It also frees up a large chunk of money each month which gives you more freedom.

While you are mulling things over ( and hopefully tucking that money away), spend some time learning about investments which ValiantSon has already mentioned. If you speak with an IfA then they are likely to suggest investing so having some knowledge will make it less scary (or you could try DIY). Lurk on this forum and absorb as much info as you can.

xylophone

As above, hold in NS&I and give yourself time to think.

After you have decided on the property question, you may wish to consider your pension options.

You may then wish to consider investment options, perhaps initially a stocks and shares ISA for you and for your other half to which you could continue to contribute in subsequent years?

https://forums.moneysavingexpert.com/discussion/comment/74562683#Comment_74562683

Do you have the most appropriate current account(s) for your needs?

Linton

As above, put in NS&I for safety. Dont do anything in haste.

Before you can decide what to do with the money you need to think through what you may want it for, and roughly how much money in the:
Short term
1) Keep some in cash as an emergency fund if you havent got one
2) Pay off mortgage? This may or may not be the best use of the lump sum.
3) Anything needing replacing?
4) Holiday?

Medium term
1) New house?
2) Children's(if any) expenses?

Long term
1) (Early) retirement?
2) Inheritance for family/friends/charity?

And/or ongoing income to supplement your wages.


Each time frame will require a different strategy for managing the money. Professional advice from an IFA could well be helpful, particularly for the long term money or ongoing income.

Matt5_2

Thank you for all your replies, it’s been a great help. I think from the advice I’ve received I’ll certainly look at opening an NS&I Income bond account and keep the majority safely tucked away in there for the time being.

My mortgage position is I’m in the first year of a 5 year fix at quite a favourable interest rate (I can’t recall what percentage it is off the top of my head) with an LTV of around 80%. The mortgage payments are quite comfortable in respect to our income.

Not quite sure about my current account, it’s just a regular account with Barclays. I had some savings but they were swallowed for our deposit when we bought our house.

Wildsound

Condolences for your loss.

All the points above are all valid things for you to think about.

First thing is not to rush into anything you don't understand. If it means seeing an Independent Financial Adviser (IFA) (I would recommend seeing at least a couple) to give you that added feeling of security, then I would do this.

Also, don't make any rash decisions on your current circumstances. I've known people who thought they could quit their job for life because of receiving £100k - they were grossly mistaken. However, I don't get this impression from your post.

Personally, I would get that money into NS&I as suggested above, this will give you financial security in the short term whilst you collect your thoughts, do some research and speak to some IFAs if you choose to. I'd also maybe take a long holiday. From your post you seem quite frugal and grounded, but travelling to different parts of the world is something I would recommend anyone, rich or poor.

Take these initial steps and some extra time and then, by all means, come back to the forums if you need any further help, perhaps with something more focussed.

xylophone

A Santander 123 joint account might suit you and other half - with your household DDs, you would probably make enough in cash back to cover the fee and thus get 1.5% on £20,000 at instant access.

https://www.santander.co.uk/uk/current-accounts/123-current-account

ValiantSon

xylophone wrote: »

A Santander 123 joint account might suit you and other half - with your household DDs, you would probably make enough in cash back to cover the fee and thus get 1.5% on £20,000 at instant access.

https://www.santander.co.uk/uk/current-accounts/123-current-account

Perhaps, but the fee (£5) is actually quite high, and many people don't cover it with the cashback.

In many instances the best return is achieved by paying the much lower fee (£1) for the same cashback in Santander 123 Lite, and using a decent easy access savings account.