How best to use my £273,500 inheritance?

BikingBud

Cisco001 said:

BikingBud said:

Direct_talker said:

I’ve recently received an inheritance of £273,500, which is currently sitting in my current account earning zero interest.

My initial thought was to put it into an easy-access, high-interest account with monthly interest payouts. Unfortunately, such accounts don’t seem to exist. I’ve found a few online options (e.g. CHASE), but as they’re not high street names, I’m a bit nervous about them.

My situation:

·         I’m 55, married.

·         £47,000 outstanding on our mortgage.

·         House valued at around £600,000.

·         No other debts.

·         £50,000 in Premium Bonds.

·         £62,000 (current value) in inherited shares.

We’d like to keep the inheritance easily accessible, as we plan to move and may need to use some of it to top up for the type of property my husband wants (ideally with about 2 acres of land).

I’ve also thought about buying a property for my daughter to rent from us (using her Local Housing Allowance via Universal Credit), but I’m aware there are a lot of potential pitfalls with buy-to-let.

Given my family history — few living much beyond retirement age — I’m not keen to put it straight into my pension. I’d rather view our home as our retirement savings. Ideally, I’d like to invest the inheritance so that it generates a monthly income, which could allow me to cut down my working hours or even stop working altogether.

Any advice, ideas, or personal experiences would be much appreciated.

Why not pass straight onto your daughter? Give her a big boost to buy her own property and by doing it now as a deed of variation you should avoid any IHT downstream.

Would that affect daughter's universal credit?

Perhaps but if that is your sole goal rather than enabling her to have security of tenure for her own home and future then I will leave it there.

The benefits board should be able to answer in a non-judgmental manner.

Direct_talker

In response to Cisco001: anyone can buy to let to a family member, provided it is a commercial agreement. This means a tenancy agreement, and realistic rent can be obtained even if the tenant is receiving benefits and has a family member.   (I recently left a DWP UC workcoach role, so I saw this happen often.)

Linton

Direct_talker said:

I’ve recently received an inheritance of £273,500, which is currently sitting in my current account earning zero interest.

My initial thought was to put it into an easy-access, high-interest account with monthly interest payouts. Unfortunately, such accounts don’t seem to exist. I’ve found a few online options (e.g. CHASE), but as they’re not high street names, I’m a bit nervous about them.

My situation:

·         I’m 55, married.

·         £47,000 outstanding on our mortgage.

·         House valued at around £600,000.

·         No other debts.

·         £50,000 in Premium Bonds.

·         £62,000 (current value) in inherited shares.

We’d like to keep the inheritance easily accessible, as we plan to move and may need to use some of it to top up for the type of property my husband wants (ideally with about 2 acres of land).

I’ve also thought about buying a property for my daughter to rent from us (using her Local Housing Allowance via Universal Credit), but I’m aware there are a lot of potential pitfalls with buy-to-let.

Given my family history — few living much beyond retirement age — I’m not keen to put it straight into my pension. I’d rather view our home as our retirement savings. Ideally, I’d like to invest the inheritance so that it generates a monthly income, which could allow me to cut down my working hours or even stop working altogether.

Any advice, ideas, or personal experiences would be much appreciated.

In the past few people lived significantly long after retirement. Nowadays, thanks to much improved working conditions and health care if they do reach retirement age people will on average live another 20 years or so.  See here

Taxed income from cash savings is unlikely to provide an optimal income - interest rates are falling and cash savings provide no protection against inflation. 

If you will be using most of your inheritance to enable you to retire earlier than would otherwise have been possible and do not have the experience of managing such a arge sum of money I would strongly take the view that you should consult an IFA.

They get their money from providing appropriate advice on how to use your money to achieve your objectives and from managing it in line with those recommendations if you dont feel able to do this yourself. They do not get commission or other such inducements by recommending particular investments.  Furthermore, they can be held liable if their recommendations are inappropriate leading to you losing money

Cisco001

Direct_talker said:

In response to Cisco001: anyone can buy to let to a family member, provided it is a commercial agreement. This means a tenancy agreement, and realistic rent can be obtained even if the tenant is receiving benefits and has a family member.   (I recently left a DWP UC workcoach role, so I saw this happen often.)

I believe BikingBud was on about buy a house in your daughter name as gift.

My question was if that impact UC. 

lagransiete

El_Torro said:

While I agree with those who say you should see an IFA I fear they might not tell you what you want to hear, or at least not give you advice that you will follow. An IFA makes their money from you investing in the stock market, if you don't intend to do this then there's not much point in speaking to one. 

My immediate term suggestion is to move the money to NS&I. The interest rate isn't great but all the money is protected (which isn't the case in a private bank). If you want to play around with regular savers, high interest savings accounts and Cash ISAs to earn more interest you can worry about that later. The immediate goal should be to put your money where it is protected and earning some interest.

Some work for a flat fee, and that is the route I would follow. The challenge for us as clients  is finding one with a good track record .  I agree about NS&I. One year bond at 4.18% may not be the best, but it is safe and will accept a max of £1 million. 

kaMelo

Cisco001 said:

Direct_talker said:

In response to Cisco001: anyone can buy to let to a family member, provided it is a commercial agreement. This means a tenancy agreement, and realistic rent can be obtained even if the tenant is receiving benefits and has a family member.   (I recently left a DWP UC workcoach role, so I saw this happen often.)

I believe BikingBud was on about buy a house in your daughter name as gift.

My question was if that impact UC. 

If the house was bought and gifted to their daughter then no it would have no impact on UC. If money was gifted to the daughter to buy a property then maybe, depending how long they held the money before purchase.

Direct_talker said:

In response to Cisco001: anyone can buy to let to a family member, provided it is a commercial agreement. This means a tenancy agreement, and realistic rent can be obtained even if the tenant is receiving benefits and has a family member.   (I recently left a DWP UC workcoach role, so I saw this happen often.)

Whilst possible in certain scenarios it is not as straightforward as you suggest. Unless there is a history of previous letting of the property or it forms part of a larger portfolio it would almost certainly be considered a contrived tenancy.