Inheritance money, help!

BlueDressingGown

I have nobody to ask and the few I could ask are a little resentful of my situation so please be kind if you reply. My mum died last year. She owned her London home. I am the executor and myself and a sibling are beneficiaries. The house has got sale agreed and fingers crossed the sale will go through and I will do my duty and split the money after debts are paid etc. my question is what the heck to do with the money. I’ve never had money before, I don’t own a house or anything else, have no savings but no debt either. I have two working adult children. I’m single. This is the only time ever we will have just over £600k coming our way. 

A ‘friend’ keeps trying to introduce me to his financial advisor. I’m frozen, I don’t want to make mistakes with the money and don’t want to trust the wrong people in the real world. I understand I have to split the money up so no one bank has more than £85k but I don’t understand the issues around tax. Please be gentle 

El_Torro

One thing to potentially spend the money on is a place to live. Depending on where you live it might be easy to buy a place mortgage free. Just make sure you are able to keep up with other bills, repairs etc... Owning your own property means you can't be kicked out by a landlord and you're no longer paying rent. 

With the rest of the money it's worth looking at ISAs and pensions. There are restrictions on how much money you can put in these places though. 

For now I would open an account with NS&I and put the £600k there (once you get it). NS&I won't give you an amazing interest rate but all the money is protected, not just the first £85k. 

eskbanker

BlueDressingGown said:

I understand I have to split the money up so no one bank has more than £85k

Eventually - FSCS protects up to £1m for up to six months after significant life events such as inheritance so there's no huge rush to act, and you can simply keep the money in a savings account while you consider your options.

If you're not confident in deciding for yourself, and don't feel able to trust friends or family, then you will get some ideas from anonymous online strangers on here (property, pensions, saving, investing, etc) but your best bet really will be to engage with an adviser.  The key thing is to work with an independent financial adviser rather than one tied to an individual firm's products, and they'll generally offer a free introductory meeting, at which you can establish if they feel right for you, so speak to several (don't feel pressured to go with one recommended by a friend, but word of mouth is generally a good way of finding one) and take it from there.

https://www.moneysavingexpert.com/savings/best-financial-advisers/

Albermarle

There probably four basic routes for the money.

1) Use it towards buying a house
2) Put some in a safe savings account(s) that can cover any needs you might have in the next few years.
3) For the long term future invest some of it, possibly via a pension.
4) Spend some of it

As said it could be a good idea to engage with a local  IFA. Be careful of friends recommendations.

but I don’t understand the issues around tax

Tax is not really a priority. What matters is to use the money in a way that will best benefit you. If you have to pay some tax along the way, then that is not a major issue.

Brie

3 immediate suggestions for you when the ££ is available.  Put £20k into an ISA.  Put £50k into premium bonds.  Put the most of the rest into a high interest savings account that you will be able to access in a few months time when you've had time to think things through more clearly. 

Do you want to own your own home (assuming you don't already)?

An IFA, if and when you find one, might help you put the balance in to more pension provisions, maybe help you sort out things like getting a will in place so you can pass money along to the kids.  But take your time, anyone who tries to rush you into a decision isn't acting in your best interests.

fyi - when my MiL died and the OH came into a bit of money (nowt like what you're getting) he decided to spend a chunk on doing something his mom would have liked.  So he booked us a nice holiday in Dresden to see an opera.  I thought that was a good way to honour her.  

badmemory

From a what do I know point of view.  I would be looking at how much a roof over my head would cost, somewhere I would like to live, maybe close to work or maybe family.  If nothing else it can make retirement easier & save having to move or fight a move in my later years.  Premium bonds are fairly easily cashed in for either long or short term savings & can have good returns especially if you have the full £50k.  Extra into your pension.

I wonder if you also live in London then the roof over your head may not be possible.  In which case I would think over things people have suggested & then go and see an INDEPENDENT financial advisor.

Eyeful

1. Do not panic, take your time to think what you want to do with the money.

2. As the money is from a house sale, you may be covered by "Temporary High Balance Protection"
https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

3. Money with NS&I is a lone to the UK Government so has 100% protection

4. Make sure you understand the difference between: 
(a) Independent Financial Advisor (IFA) : Who works for you and looks at the whole of the markets.
(b) Restricted Financial Advisor (FA): Who works for his employer, and can sell you his employers products only.
https://www.which.co.uk/money/investing/financial-advice/how-to-find-a-financial-adviser-afZ375F6BIiC
https://societyoflaterlifeadvisers.co.uk/

eskbanker

Eyeful said:

2. As the money is from a house sale an inheritance, you may be covered by "Temporary High Balance Protection"
https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

Fixed that for you, as per the linked article:

If your temporary high balance exists because of a real estate transaction, it must relate to your main residence for FSCS protection to apply.

Heedtheadvice

As is often the case when I read posts such you started this thread with, I cannot add much more opinion than those already expressed.

I like to play safe ( a sort of risk reduction! ), and who am I to suggest what you do with your inheritance other than think about security ( housing, future needs, emergency fund etc) and cost reduction ( debts etc) plus do get some enjoyment out of it too without too much of an impact on the other suggestions.

One thing that does strike me,  however  is your statement regarding tax. If you are an Executor I would hope you are fully conversant with your duties - and this includes taxation regarding the Estate and Inheritance rules. If not then do ensure you are doing the right things before getting into potential deep water. 600k Estate value could well mean a tax situation ( a 2×600k Estate value even more likely) and then involving any recent gifting by your mother and latterly informing HMRC regarding the house sale. All this needs clarity and sorting prior to dispersal to beneficiaries.

Will be very pleased if this latter part of my post has been pointless!....but if not you have work to do.

poseidon1

Heedtheadvice said:

As is often the case when I read posts such you started this thread with, I cannot add much more opinion than those already expressed.

I like to play safe ( a sort of risk reduction! ), and who am I to suggest what you do with your inheritance other than think about security ( housing, future needs, emergency fund etc) and cost reduction ( debts etc) plus do get some enjoyment out of it too without too much of an impact on the other suggestions.

One thing that does strike me,  however  is your statement regarding tax. If you are an Executor I would hope you are fully conversant with your duties - and this includes taxation regarding the Estate and Inheritance rules. If not then do ensure you are doing the right things before getting into potential deep water. 600k Estate value could well mean a tax situation ( a 2×600k Estate value even more likely) and then involving any recent gifting by your mother and latterly informing HMRC regarding the house sale. All this needs clarity and sorting prior to dispersal to beneficiaries.

Will be very pleased if this latter part of my post has been pointless!....but if not you have work to do.

Quite right to raise issue of tax. Even a £600 k  estate can attract inheritance tax on death, with potential for further taxes arising during the estate administration period ( OP shared no details of the deceased's marital status).

OP confesses to having zero knowledge on tax matters so prior to seeking investment advice, best to obtain professional advice to ensure all tax matters related to the estate have been discharged.

BlueDressingGown

Brie said:

3 immediate suggestions for you when the ££ is available.  Put £20k into an ISA.  Put £50k into premium bonds.  Put the most of the rest into a high interest savings account that you will be able to access in a few months time when you've had time to think things through more clearly. 

Do you want to own your own home (assuming you don't already)?

An IFA, if and when you find one, might help you put the balance in to more pension provisions, maybe help you sort out things like getting a will in place so you can pass money along to the kids.  But take your time, anyone who tries to rush you into a decision isn't acting in your best interests.

fyi - when my MiL died and the OH came into a bit of money (nowt like what you're getting) he decided to spend a chunk on doing something his mom would have liked.  So he booked us a nice holiday in Dresden to see an opera.  I thought that was a good way to honour her.  

Thanks, yes I’ve planned for premium bonds and to do my isa. I will buy a house but I think that is why I’m so unsure as I’ve never lived anywhere except London but don’t wait to use all the money to buy a one bed flat. It’s not just Cornwall the locals can no longer buy in their own home town. I do have a private pension that I took three years ago when I was 55 it gave me time with my mum and I lived off the lump sum and monthly pension. I want to help add to my children’s deposit savings. 

I didn’t travel for many years for different reasons so have an idea to do some travel and stash the rest to earn some interest or buy a second property to rent for income though I hear that can be a nightmare. Or stash the money and live frugally on interest But never having to worry about bills again.