Being given £200k 20 October 2022 at 9:50PM in Savings & investments 38 replies 3.5K views

Keep_pedalling

Beccabees said:

Thank you everyone.

Thankfully they are in good health so the seven year rule will hopefully not be a problem but we will keep a big cash pot for the next few years at least in case that changes.

They are well into IHT territory, I’ve no idea what their assets are over all but their primary residence alone will be several million and I believe divesting in time to avoid the full IHT hit is part of the reason they want to do this.

We also have a two year old so could think about a JISA for each of the kids - though the risk of them being irresponsible at 18 does worry me a bit!

You don’t need to keep back the money in case they both die prematurely, the money they are giving you is not going to be subject to IHT that will come out of there remaining assets. The gift will simply reduce their nil rate bands by £100k each over the next seven years.

billy2shots

You say you and your partner are higher rate tax payers. Can you pay more into your pension to reduce your tax bands and top up your living expenses from part of  this cash pot windfall. 

You could save 20% (on the difference)
Plus earn a little interest whilst that cash is sat in an interest generating account (instant access). 

Sea_Shell

It sounds like they are well able to make this gift, without it having any impact on their ability to provide for themselves comfortably in later life, so hopefully there won't be any strings about "care" attached, of the "i'll just come and live with you in the future" kind.

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?

Tucosalamanca

Looking forward a little...

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.

Albermarle

Pensions contributions are ok I think, everyone worries about having enough but we are contributing 10% each with employers paying 5%. We are both higher rate tax payers and 33 so have a way to go before retirement

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.

Sea_Shell

Another thought...

Is your OH an only child?

If not have his siblings been made equally generous offers?

HCIMbtw

Each of you max out S&S ISA, global fund £20k each, put £80k each into a fixed rate or fixed term savings account.. job done 

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. 

 

Beccabees

Sea_Shell said:

Another thought...

Is your OH an only child?

If not have his siblings been made equally generous offers?

He is not an only child, he has one brother. The brother won’t be getting anything now as they paid a very substantial deposit (I don’t know how much but they said the £200k wouldn’t cover it) for his flat a couple of years ago. The money is coming from the sale of a rental property as they got an unexpectedly good offer from a neighbour.

Beccabees

Tucosalamanca said:

Looking forward a little...

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.

Pensions for the kids is appealing actually. JISAs scare me as I have a sister who managed to fritter away the contents of a simile savings account our grandparents gave her at 18 so I’m not keen for the kids to get too much money too soon.

ellenvan

It depends on your relationship with the in=laws but could you have a conversation with them about what they would like to see the money spent on. If they just say they are happy for you to spend however that's great. If you do not want to do this you may still know what they would prefer and I would give some consideration to this.

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.