How to plan for arrival of 6-figure sum when deceased parents’ house is sold.

Mellow_gogo

Hi all, apologies in advance for the waffle. I’m 53, married, with no children or debts. I’ve worked in local government for 25 years and earn about £36K. I’m in the LGPS and also contribute monthly to a SIPP. My wife, who is five years younger, works freelance, earns £20–25K, has limited savings, and contributes a small amount to a SIPP. As I earn more, I cover a larger share of our expenses.

I’ve always saved sensibly without overthinking it. I currently hold £95K in cash ISAs (too much, I know), £188K in a S&S ISA, and £130K in a SIPP. My 2025 LGPS is currently worth around £15K a year. I plan to leave this untouched until state pension age. I hope to reduce my working days in my late 50s.

The second of my parents died recently, and probate has just been granted, meaning I will inherit about £55,000 in cash. With the tax year ending soon, I intend to use most of this to top up my SIPP and S&S ISA this year, and again from April. (We will also have a much needed holiday).

A bigger question on my mind is this - once we have finished the terrible job of clearing and then selling my parents’ home, my brother and I are likely to each receive approx £120,000–£140,000 from the sale. I want to use this as my parents would have wished—to make our lives easier—but I’m unsure how best to plan for this six-figure sum.  Should I finally look for some input from a financial adviser?  Is there anything obvious that I should be considering or that I’m missing?

It has been a stressful few months so perhaps I’m overthinking things, but thanks for reading and for any opinions you may have on any of the above.

Sam_666

Sorry for your loss.

Maximise your wife sipp.
Maximise your own sipp.
Convert cash isa to S&S isa, pick global cheap tracker.
Get your wife to open S&S isa and invest as above.
Make sure you got war chest resrve. I wouldnt keep more then £50k, but that is personal choice.
What about your morgage? (dont pay it off)
Get good trading account and invest wisely.

daveyjp

One obvious option as you are in LGPS are AVCs, especially if they are offered through salary sacrifice.

You could reduce your salary to minimum wage and use the inheritance funds for living expenses.

Come retirement thats a nice 100% tax free lump sum (subject to max tax free limits) to buy extra guaranteed LGPS income.

Yorkie1

Just reflecting on your plans to contribute some of the £55K before the end of this tax year - it might be worth checking with a solicitor if you have one, or perhaps on the Funerals and Probate board in here if not, whether you should be distributing the cash element of the estate before the house is sold and the estate is finalised. I'm not necessarily saying you shouldn't do this, but just to flag that it might be worth double checking if you haven't already.

Triumph13

I'd start by making sure your wife builds enough in her SIPP to fully utilise her personal allowance between retirement and state pension age as that's both tax efficient and accessible at the tightest point cashflow-wise.

LGPS AVCs are equally tax efficient, but not accessible until you start drawing your LGPS pension. That would therefore be the best option once you are happy you have enough accessible funds before then.

Aftwer your wife's SIPP, your SIPP is probably the priority for funds needed before you access your LGPS.

ali_bear

Seems that you already have a pretty decent pension provision, although you could probably rebalance by moving out of cash into S&S and putting more into the SIPP wrapper by upping your regular contributions.

This inheritance is a once-in-a-lifetime event. I think you should consider carefully how you use it and definitely involve your family in the discussion.

Linton

The first thing to do is to put the money somewhere safe until you have developed some plans. Then think through what you want the money for. Retire early? Increase your standard of living now?

Understanding what you want to achieve will determine where you best put the inheritance for the long term.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81896556#Comment_81896556

This.

If your wife stops working before state pension age, then each tax year she still will have her personal allowance.. If she had no other taxable income, she could withdraw over £16K a year tax free from the SIPP ( 25 % tax free and 75% taxable but not taxed) . So 20% tax relief on SIPP contributions, and potentially no tax on the way out.

So you could give her money to add the max to her SIPP , which would be her annual salary . So if she earned £20K , she could add £16K and £4K tax relief would be added.

penners324

MMortgage Paid off as well?

Mellow_gogo

Hi all,

Thanks for your responses and comments. Much food for thought on a number of points.

And in response to the last comment, yes the mortgage is paid off.

Thanks

NormalNorman

We will be getting a multiple six figure sum too at some point too.

From our detailed spreadsheet we have mapped out the expected retirement income from 58. We used a stacked column chart. Just makes it visual as to what income streams start/end over retirement. It's a good way to see if there are any gaps in your provision that need to be bolstered. Also helps you tax plan and create scenarios.

We have another graph for expenditure so we can see typical expenses into retirement and what may drop off like uni costs, changing to one car, mortgage paid off, downsize property etc.

For ourselves, it may be best to bolster ISAs etc having enough provision in SIPPs/DBs/SPs etc as we don't want every source of income to have a tax code.

Cheers!