Receiving inheritance

Albermarle

BlueberryPlum said:

That all sounds very depressing, nothing positive I could do with my dad's money then

A newer car, no debts and a holiday don't seem depressing ?

BlueberryPlum

Thank you 

infj

I think you need to not panic - you have loads of time to think about what you want to do with the money - you don't have to decide the minute the money arrives. Even if you just initially dump the money in a few different savings accounts (Isas, NS&I) and can get a 4% interest rate on them, you will be earning £4000 a year on it.
Then you can think and learn more about your options. Paying off any debt is a no brainer but then think about where this money could make your lives easier.
You don't need a financial advisor.
I don't think buying a house is a good idea either for all the reasons you listed.

ian1246

Pay off your debts, then stick the remaining capital into Savings / Isa's.

Have a look at the regular savings threads on this forum - feed the capital in every month to them to maximise your interest return - there are some 6% & 7% regular savers out there, alongside 3.9%-4%+ cash Isa's (you can only put in £20,000 each year into a ISA). Easy access up to 5%

Realistically you could probably manage a post-tax interest return of around 4% - £4000 - equivilant to £333.33 a month, plus whatever you save from no longer having debt repayments. 

Hopefully that'll go some way to offsetting your lost universal credit - but over time, that £100,000 will devalue with inflation.

My preferred option? In your shoes I'd look into a shared ownership property - keep £12,000 back in savings (£6000 each) then use the rest to purchase a sizable portion of a shared ownership property - that'll take you back below the savings limit for Universal credit, boosting your income - the part of the property you don't own you'll then pay rent on, but be able to claim housing allowance for as part of your universal credit claim. You could look at taking out a mortgage to boost the share of the property your buying - or just use the capital alone.

You can then look at staircasing as your circumstances allow to accrue a larger portion of the property.

fuzzzzy

ian1246 said:

Pay off your debts, then stick the remaining capital into Savings / Isa's.

Have a look at the regular savings threads on this forum - feed the capital in every month to them to maximise your interest return - there are some 6% & 7% regular savers out there, alongside 3.9%-4%+ cash Isa's (you can only put in £20,000 each year into a ISA). Easy access up to 5%

Realistically you could probably manage a post-tax interest return of around 4% - £4000 - equivilant to £333.33 a month, plus whatever you save from no longer having debt repayments. 

Hopefully that'll go some way to offsetting your lost universal credit - but over time, that £100,000 will devalue with inflation.

My preferred option? In your shoes I'd look into a shared ownership property - keep £12,000 back in savings (£6000 each) then use the rest to purchase a sizable portion of a shared ownership property - that'll take you back below the savings limit for Universal credit, boosting your income - the part of the property you don't own you'll then pay rent on, but be able to claim housing allowance for as part of your universal credit claim. You could look at taking out a mortgage to boost the share of the property your buying - or just use the capital alone.

You can then look at staircasing as your circumstances allow to accrue a larger portion of the property.

With shared ownership would they not still be responsible for property repairs which could put a strain on finances?

jimjames

BlueberryPlum said:

That all sounds very depressing, nothing positive I could do with my dad's money then

Other than all the suggestions made? Which ones aren't suitable? They seem to be some good options for maximising the money you've received.

Ratkin007

You mentioned buying your current house, I would suggest you make the enquiry to see if you have the right to acquire and if you do, find out how much it will be.  You will then be in a better position to make a decision on whether or not it is viable.  Yes you will be responsible for repairs, but the mortgage might not be as much as you expect it to be.  If you don't have the right to acquire, you no longer need to think about that option. 

fuzzzzy

Maybe also have a look at the benefits forum. There have been posts on there of a similar nature from other people on UC receiving an inheritance. Despite Bigwheels' depressing post it might actually be worthwhile paying a chunk into your pension.  It depends on whether you think you will always be on benefits or not.

ian1246

fuzzzzy said:

ian1246 said:

Pay off your debts, then stick the remaining capital into Savings / Isa's.

Have a look at the regular savings threads on this forum - feed the capital in every month to them to maximise your interest return - there are some 6% & 7% regular savers out there, alongside 3.9%-4%+ cash Isa's (you can only put in £20,000 each year into a ISA). Easy access up to 5%

Realistically you could probably manage a post-tax interest return of around 4% - £4000 - equivilant to £333.33 a month, plus whatever you save from no longer having debt repayments. 

Hopefully that'll go some way to offsetting your lost universal credit - but over time, that £100,000 will devalue with inflation.

My preferred option? In your shoes I'd look into a shared ownership property - keep £12,000 back in savings (£6000 each) then use the rest to purchase a sizable portion of a shared ownership property - that'll take you back below the savings limit for Universal credit, boosting your income - the part of the property you don't own you'll then pay rent on, but be able to claim housing allowance for as part of your universal credit claim. You could look at taking out a mortgage to boost the share of the property your buying - or just use the capital alone.

You can then look at staircasing as your circumstances allow to accrue a larger portion of the property.

With shared ownership would they not still be responsible for property repairs which could put a strain on finances?

They would indeed.

However, provided they only buy whatever share of the property they can with the existing inherited capital and don't take out a mortgage, unlike with a full-ownership property purchased via a mortgage, they would receive Universal Credit Support for the amount they pay in rent on the share they don't own.

That would mean their income with a shared ownership property would likely be substantially higher (due to the UC payments for the rent) than if they had full ownership of a property with a substantial mortgage - in theory, most of the rent would be covered by the Housing-Allowance linked element of Universal Credit, leaving the rest of their income to live off / cover maintenance costs. With a mortgage they would have no housing-allowance linked Universal Credit Element and would thus have to cover living costs AND mortgage costs from their income (including reduced Universal Credit amount).

On top of that, many shared ownership properties are brand new and therefore in theory should have some guarantee's included - reducing the likelihood of future maintenance costs.

It might not be the right answer for them - but there is a potentially key difference for their circumstances if they did decide to look into shared ownership without a mortgage.

Ultimately, if they stay in their existing property with the capital in the account, they'll loose all entitlement to Universal Credit and therefore loose that income completely - likely eating into it gradually to top up expenses, all the while it will devalue from inflation. Within 10 or 15 years at maximum, it'll be as if they never received that inheritance.

Getting their foot on the property ladder - be that full ownership or shared ownership - ties the capital up in housing. That's a legitimate use of capital for Universal Credit purposes and therefore they will be eligible to continue claiming - effectively boosting their income. Plus whilst there is always a risk that property prices will drop, there is also a significant likelihood that property prices will rise - meaning that capital tied up in the property will rise as well.

fuzzzzy

I do recall having read some bad things about some shared ownership schemes but can't off the top of my head remember exactly what, possibly just that you can be responsible for the full upkeep of the property despite just being part owner, and maybe some other unfavourable loopholes, but still definitely worth looking into considering the points made about retention of UC