Inheritance money, help!

DRS1

BlueDressingGown said:

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. 

When I stopped work interest rates were north of 5%.  I could look at the money in the bank and say yes that will generate £x interest and I can live off £x (or less).  A year later interest rates were 0.5%.

Now that is an extreme example and unlikely to happen again but it did happen within living memory.  You can't bank on bank interest to give you an income you can live on.

Spikeygran

I would definitely buy something sensible 2 bed house or bungalow in an area you want to be in retirement.  You can let it out for now, it doesn't have to be a nightmare.  A friend lets 4 houses, goes for professional tenants.  Shes had 95% occupancy over the years, has had little bother with the tenants. But the management companies (a necessary evil) tend to come and go, shes on her 4th. 

Yes stash as much safely in tax free accounts, so you have rainy day money.  In my experience premium bonds keep up with other investments, though I know some say they never get anything, its a chance, but I think the capital is safe.  I assume you may give some to the kids. 

After that treat yourself, you dont have to go mad, just do stuff now that you always wanted to do, while you are fit enough to do it.  You cant take it with you.  People worry about whether they will have enough in retirement, and gauge it on what they spend while working,  but as you age your requirements change drastically. Sitting in your own home (rent and mortgage free) and being able to potter about a garden (if its your thing) may be all you want to do at some stage.  It becomes not a case of whether you can afford  to go on a cruise (for example)  but whether you can face going.

I just thought I'd add that if you get a health insurance as part of your working benefits (bupa etc) you can often continue it at a beneficial rate when you retire.  With the state of the NHS at the moment, if you can putting money aside for that seems to be a good plan.

SevenOfNine

Something to think about if your adult offspring haven't inherited any in their own right..........

We did a Deed of Variation via a solicitor (to be absolutely certain it was watertight legally/tax etc), passed £50k each to our 2 young grandsons (our adult son, their dad, had inherited a hefty sum in his own right).

If you choose to 'gift' anything to your children, be mindful there is an 'amount' limit. That's why we chose the DoV route.

ShinyStarlight1

BlueDressingGown said:

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 

I was in the same situation as you - I was left a lot of money after a lifetime of having none. I also had no education in finances as I’d never had remotely enough to need it.

I found this forum, and the links people included in their posts, really helpful. Much of it went over my head, and still does, but bits of it are starting to make sense.

You and I will have different circumstances but some things are universal: the need to have a secure home, the peace that comes with having an emergency fund etc. It might be good to work out what your needs are, now and in the future, and allocate money for that.

A good bit of advice I got after my parents died: don’t make any big decisions while you are grieving.

It might be good to put your money somewhere safe while you grieve, acclimatise to having money, and learn what’s out there.

Good luck to you.

Albermarle

Yes stash as much safely in tax free accounts, so you have rainy day money.  In my experience premium bonds keep up with other investments, though I know some say they never get anything, its a chance, but I think the capital is safe.

With Premium bonds the capital is safe. If you hold the full £50K of bonds then over a long period you would normally expect to get the average prize rate, although the amount will vary quite a lot from one month to the next.
The prize rate is a little less than you can get interest in a normal savings account, but there is always the very small chance of winning a bigger prize.
Over the long term you would expect investments in stocks and shares ( if done sensibly) to give a better return than Premium Bonds, or savings accounts, but it can be a bit of a roller coaster ride. Hence why it is always said that successful investing is a long term game .

CrazyBee787

I do own my own flat and it has been my haven for the last few years, I am working towards paying off the mortgage but I did a long term fix at a good rate plus I had a healthy deposit. I just want to say I have always wanted to own, because owning comes with securities. However if you do decide to own come back on the forum and ask for advice about buying a home, I can think of a lot of good pointers right now but I don't think it is quite the right time. Put the money somewhere safe for the time being if you haven't already decided after reading these posts. I know a lot of the money would go on a house should you decide this option and it may take the joy of having excess cash out. But think about the security and the rent money you will no longer need to pay out. Obviously there will be maintenance but I can tell you if you are smart with your house buying (Like using a surveyor) then the maintenace in reality should be a lot less then rent, if this was your questioning which I find with a lot of renters. Also I like the idea of doing something or marking your mums memory in a special way, for example going soemwhere where she couldn't quite make it in her time but always wanted to. Kindest Regards. CrazyXX

silverwhistle

enthusiasticsaver said:

Presumably you will end up with about £300k then assuming it is split between 2 siblings.  The estate may be liable for inheritance tax so presumably the probate solicitor has talked about that.  The allowance in the UK for 2025 is £325k which may increase to £500k if there is a residence being passed on. If your father predeceased your mum (and they were still married) then you could possibly use his allowance too depending on when he died and how his estate was dealt with. 

My mum died earlier in the year and although the estate was not much over the limit it was well within it when the tax relief from when dad died was included, so I hope that has been sorted for you. I did all the work myself but fortunately property had been disposed of earlier, so I don't envy you that task. It's all a bit of a learning curve.

I shared the inheritance too and as yet haven't done anything with my share apart from the Premium Bond/ISA route which are sensible suggestions. 

As a little treat to myself I've bought a better quality Irish whistle: less than €100 but it octaves beautifully and a lovely tone. I could have afforded it before but I'm thanking mum for it.. It's her birthday today so even more than usual she is in my thoughts.  

Bostonerimus1

Make sure you understand any taxes involved with the estate so talk to your solicitor and ask questions; that's what you are paying for. Then here's what I'd do with the money:

Put 6 months' to a year's spending in an easy access savings account.
Pay off any debts...maybe excluding the mortgage depending on the interest rate, but consider that too.
Make extra payments to you pension, invest in low cost index funds or a multi-asset fund.
Fund a S&S ISA, invest in low cost index funds or a multi-asset fund.
Fund a general investment account, invest in low cost index funds or a multi-asset fund.

MEM62

BlueDressingGown said:

A ‘friend’ keeps trying to introduce me to his financial advisor.

In you situation I would recommend an adviser - however, you do not want a Financial Advisor, you want an Independent Financial Advisor.  

BlueDressingGown said:

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 

Why would you keep the money in bank accounts?  This is one example of why you need an IFA.  

badmemory

I think the basic questions are

Are you going to buy your own house?

If you are what amount of money would be left?

As you are already retired what sort of emergency fund would be good for you before tying up anything else for too long?

If it was me I would be looking at thinking about whether I want my own roof as a priority.  You don't have to do it today or even for months but it will effect what you need to do with the available funds because you don't want them tied up too tight.