Inheritance advice

erb66 · 9 January 2019 at 10:29PM

My first posting on this site so go easy on me please! 😊

There are similar questions to mine elsewhere on the forum but my circumstances are a bit different to the examples I found so I thought I'd give it a go.

My dear Mum sadly passed away last August and I am about to inherit approx £220k. My current personal/financial situation (its a sorry tale!) is as follows.

I'm 52 and the wife is 50. Im self employed and earn about £35k net of expenses (but before tax). She earns approx £19k. She has virtually no pension savings and my pension arrangement is an Investment Platform with a decent sum in that I'm paying about £100 a month into at present (not enough I know, I'd like to increase this ideally when finances permit).

Now for the gory bit. We rent our property (yes I know what you're thinking, AT YOUR AGE??). We also have no savings and joint credit card debt of about £40k. Long story!

We live in Kent, my wife is Cornish and we want to use this life changing sum of money to move back down there for a fresh start, get debt/mortgage/rent free and be near to her parents again. This will obviously mean getting new jobs down there too either in advance of moving or once we're down there. So at this stage I've no idea what our income would be at that point but let's say for arguments sake, our joint income would be around £35-40k.

So my thoughts are that with the inheritance we'd go along these lines:

1 Pay off all Card debt
2 Put £20k in a rainy day ISA
3 Use the rest to cash buy a house outright. We've looked at houses in certain areas of Cornwall and can get the kind of place we'd be happy with for around £150k

That's our thoughts anyway, be interested to hear input plus recommendations on where to put the money until we use it. From what I've seen on here already, a mix of filling an ISA and then splitting the rest across easy access savings accounts seems to be the way forward.

OK, go!

kidmugsy · 10 January 2019 at 12:24AM

erb66 wrote: »

I am about to inherit approx £220k.

I'm 52 and the wife is 50. Im self employed and earn about £35k net of expenses (but before tax). She earns approx £19k. She has virtually no pension savings and my pension arrangement is an Investment Platform with a decent sum in that I'm paying about £100 a month into at present.

We rent our property We also have no savings and joint credit card debt of about £40k.

So far so easy. Pay off the debt, leaving you £180k. Aim to buy a property so that in retirement you won't be paying rent. Then save like billy-oh to get yourselves some pension income to supplement your State Retirement Pensions. Only question: have you got official predictions of the size of your SRPs?

erb66 wrote: »

... 2 Put £20k in a rainy day ISA
3 Use the rest to cash buy a house outright. We've looked at houses in certain areas of Cornwall and can get the kind of place we'd be happy with for around £150k

You'd get better interest outside an ISA than in, but that's a second order consideration: getting yourselves an emergency cash fund is exactly right.

So the big worry is whether you can get yourselves jobs in Cornwall. As long as you start by renting in Cornwall until the jobs are fixed up, and then buy the house once you are happy in the jobs, it all seems pretty reasonable to me.

Remember that when the money arrives you want immediately to hold it across more than one account: only £85k per person is protected per bank - or, strictly, per banking licence. Or keep it at ns&i: they have a Treasury guarantee.

In your shoes I think I'd open my new bank/building society/ns&i accounts while I still have a permanent address in Kent.

Good luck with it all.

eskbanker · 10 January 2019 at 1:08AM

kidmugsy wrote: »

Remember that when the money arrives you want immediately to hold it across more than one account: only £85k per person is protected per bank - or, strictly, per banking licence.

Inheritance qualifies under the FSCS's temporary high balance arrangement for up to six months so there's no rush to spread it for protection reasons (although doing so for interest purposes is a different story):

FSCS protects temporary high balances in your bank account of up to £1million for up to six months.

Certain life events could have caused a temporary high balance in your bank account, including:

[...]
Inheritance.

Proceeds of a deceased's estate held by their personal representative.

badger09 · 10 January 2019 at 2:05PM

Pretty much agree with kidmugsy's suggestions. Don't buy in Cornwall until you know you can find work there. As you're self employed, can you work anywhere?

If OP &/or his wife have never owned a property, HTB ISA(s) would be a good idea though.

kidmugsy · 10 January 2019 at 3:04PM

eskbanker wrote: »

Inheritance qualifies under the FSCS's temporary high balance arrangement for up to six months so there's no rush to spread it for protection reasons (although doing so for interest purposes is a different story):

A most useful reminder, but ... I'd hate to have to wrestle with a bank/FSCS about an inheritance exception, and I'd hate to risk missing the six month deadline. Indeed, I'd hate to have all my moolah tied up with the FSCS at all, so for that reason alone I'd spread the money a bit, or use ns&i.

erb66 · 11 January 2019 at 2:57PM

Thank you for your replies, much appreciated. To address the various points raised:

1. Understand the advice that ISA would be a lower interest rate but given its tax free would that not offset that?

2. I'm self employed but I'm a London cabbie and that's not a job I can continue with in Cornwall and not the kind of job I'd look to pursue in a different guise down there either. Had enough of that now!

3. A couple of you advised me to rent before buying somewhere until I find a job. Would that not be more expensive though given we'd be paying rent opposed to paying nothing if we buy a house outright? Sorry if I'm missing something here.

Thanks again and just out of interest is there a way of getting a notification from the forum when you get a reply to a posting, I can't find it anywhere?

erb66 · 11 January 2019 at 3:02PM

Apologies, ignore that last question, I've found the notification settings now!

eskbanker · 11 January 2019 at 3:41PM

erb66 wrote: »

1. Understand the advice that ISA would be a lower interest rate but given its tax free would that not offset that?

No, not any more - most people don't pay tax on non-ISA savings because of the personal savings allowance introduced in 2016, which means that the first £1,000 of savings interest income (for basic rate taxpayers) doesn't attract tax. In the current low-rate climate, your £20K won't come anywhere near to earning £1,000 in annual interest for the foreseeable future....

So, compare accounts at a gross interest rate level, at https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

erb66 · 11 January 2019 at 3:51PM

I see, thank you for that, very useful advice 👍

Herbalus · 11 January 2019 at 3:52PM

The background to renting before buying is presumably making sure you can get work and like the area before buying. Otherwise you’d have to sell again and transaction costs are high.

It minimises some risk, but if your wife knows the area and you move close to her parents, you may be happy with the risk of not like it.

erb66 · 11 January 2019 at 3:56PM

The background to renting before buying is presumably making sure you can get work and like the area before buying. Otherwise you’d have to sell again and transaction costs are high.

It minimises some risk, but if your wife knows the area and you move close to her parents, you may be happy with the risk of not like it.

OK that makes sense. We are both very acquainted with the area, particularly the wife, and we are aware of its good and bad! So I'd like to think that risk would be extremely low. Appreciate your input though &#55357;&#56397;

Inheritance advice

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