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Being given £200k
in Savings & investments
38 replies 3.5K views
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You could save 20% (on the difference)
Plus earn a little interest whilst that cash is sat in an interest generating account (instant access).
Also, it sounds like any IHT bill, even including this gift, would be easily settled from their estate.
They sound like they want to treat the gift as an early "inheritance". So ask yourself this...
Would you be having any reservations about the money if it WERE an actual inheritance? During these troubled times, people up and down the country will be inheriting significant amounts of money all the time. Keep it on the down low from friends and other relatives, if you think it wouldn't be received well in your circle. Don't "flash" the cash!
But I can also see why you might be a little concerned about somehow needing their approval about what you do with the money (you don't, but it might not stop you feeling that way).
At the end of the day, you know your in-laws best and whether they are the "hands on" sort or not. Are they usually in your business?
You say that you don't particularly need the funds and it sounds as if there's a likelihood that you may be significant beneficiaries in the future.
Perhaps the prudent move is not to gift the money to yourselves but straight to the grandchildren.
Some funds into JISA, which will provide a solid start to adulthood.
Some funds into pensions for the kids, this would be tax efficient and offer long term security, no danger of them going crazy at 18.
Ultimately this would reduce your potential exposure to IHT.
In my mind, the sooner you can pass wealth down the generations the better.
Assuming that your kids will turn out well (we all know it's not guaranteed) it could prove to be a huge helping hand.
For any higher rate taxpayer, contributing more to a pension is very tax efficient, as you get full 40% tax relief on contributions ( assuming that you actually pay enough higher rate tax to cover it). 15% at age 33 is a reasonable rate of contribution, but if you fancy retiring before your 60's and with a good pension income, you need to up this %.
So I would increase your contributions and spend some of this gift on day to day spending if necessary.
And like everyone we were stressing about our mortgage rate soaring when we come to remortgage our scarily massive mortgage.
Sounds like reducing this mortgage could also be a good idea.
Is your OH an only child?
If not have his siblings been made equally generous offers?
Each April transfer 20k from your savings into your ISA
It's only complicated if you want to make it complicated, 200k actually seems pretty easily manageable for a couple. If you want to spend the money on something, e.g a better house in 3 years, spend it, you would still have at least £80k in savings accounts by that point.
The ISA's act as a retirement bridge if you want to retire earlier in your 50's. It sounds like you probably could be contributing better to pensions to be more tax efficient which you might want to look at.
Mortgage rates are only going one way at the moment so I would be tempted to pay 50,000 off the mortgage, 50 K into premium bonds (tax-free winnings) then house repairs, improvements and the balance into savings for the kids.
Nice problem to have.