Overwhelmed by inheritence

Lilyf · 10 August 2018 at 5:58PM

Hi all.

I'm in the sad position of recently inheriting my parents estate. My mother was always frugal, so they had a decent amount of savings and a large mortgage free house.

I'm debt free myself and currently living in the house (I was caring for Mum) so other than selling this and buying something smaller for myself, I'd like to turn the rest to 'income'. Ideally enough to live off.

Where can I go to get advice on how to do that? I've looked in to Financial Advisors, but they seemed more geared up to sell a product, like a mortgage or pension, than to provide general guidance. Who should I speak to about this please?

Many thanks
Lily

eskbanker · 10 August 2018 at 6:13PM

Firstly, sorry about your loss.

When you say you've looked into financial advisers, have you actually spoken to any? In order to generate an income from a lump sum, you will need to buy something, assuming you don't just draw down on the money, which wouldn't be a good idea, so advice on what to buy would seem sensible.

In your shoes I'd meet several IFAs (Independent Financial Advisers) for an exploratory meeting, which will usually be free, just to understand how they'd approach your situation and see if there is any rapport. If you don't have anyone from whom to get a personal recommendation, try https://www.unbiased.co.uk and/or https://www.vouchedfor.co.uk for ideas.

If you feel able, you can also share more details on here (how much do you have? how much do you need? what other assets do you have, e.g. savings, pensions, etc? how old are you? any family/dependents? employment situation? etc, etc) and see what other posters suggest, there are a number of IFAs who post here and many others who are familiar with the world of investing.

Lilyf · 10 August 2018 at 6:39PM

Thank you so much for answering. I haven't actually spoken to any IFAs yet, no.

I didn't put further details as I'm new here and didn't want to break any etiquette by over-sharing. My personal situation is that I'm early 40s, divorced and have no children or partner. No siblings either, so just me left alone. Not currently working as I was caring for my Mum while she was ill. I did own a house in the past, but that was sold for the divorce and I've rented ever since. I have no personal savings and a handful of pretty meaningless pension pots set up as I've changed jobs. On the plus side I have no debts. No credit card or loans.

The house has been valued at £300k and they had £150k in savings. They were also into antique collecting and one batch of stuff has recently been estimated at about £50k, although it's yet to go to auction.

I'd like to stay in this village, so my current thinking was to sell the house and buy two at the £200k mark (which is realistic for my area). One to live in and one to rent out. I'm happy with a pretty simple life. I don't smoke, drink or shop so minimal outgoings. Maybe a holiday once a year would be nice, I can't remember the last time I went abroad.

xylophone · 10 August 2018 at 7:02PM

For the moment while you are considering your options. you might wish to hold all the cash safely in one place with NS&I - the Income Bonds might suit.

https://www.nsandi.com/income-bonds

one to rent out.

Do you really want to be a Landlord?

https://forums.moneysavingexpert.com/showpost.php?p=67759929&postcount=7

a handful of pretty meaningless pension pots set up as I've changed jobs.

Make a list.

You intend to see an Independent Financial Adviser - ask him to look at these and recommend what is best to do in your situation.

https://adviserbook.co.uk/

If you do not return to work and have no relevant earnings, you can still contribute up to £288O to a personal pension and receive tax relief of £720.

Obtain a new state pension statement.

AnotherJoe · 10 August 2018 at 8:00PM

Lilyf wrote: »

I'd like to stay in this village, so my current thinking was to sell the house and buy two at the £200k mark (which is realistic for my area). One to live in and one to rent out. I'm happy with a pretty simple life. I don't smoke, drink or shop so minimal outgoings..

Becoming a landlord, with all the rules and regulations, need for maintenance, most certainly isn't the simple life.
Find an IFA.

Alice_Holt · 10 August 2018 at 8:02PM

As xylo (and AnotherJoe) has indicated being a BTL landlord is a long term business rather than an investment.
BTL financial returns are diminishing after recent tax changes, and many amateur landlords are selling up.
Please don't jump into this, do your sums thoroughly first.

You are sensible to get advice from an IFA, don't be intimidated by an amount of money which may seem large to you. (But you may find c.£300k (after house sale and cottage purchase) will not provide a sufficient return to live on comfortably, if that is your only income).
And think carefully about what you want to do next in your life. After caring for your mum the next few months may prove disconcerting for you. Were you a member of Carers UK?

There are a couple of things I would suggest:
Can you use some of the inheritance to retrain - is there a job / profession / or self employment that you would want to take up?
If you have been in receipt of Carers Allowance, then you have been getting NI credits towards the state pension. You may want to do some research on how to maintain NI contributions towards a SP.
Xylo's suggestion of putting money into a personal pension / SIPP is a good one.

Take it slowly - perhaps settle on a what you want to do,
buy that cottage to live in,
work out what your living expenses will be,
think about how you plan to earn a living / occupy yourself,
then do a financial plan and take IFA on how to best to have an emergency fund; have investments that give you an income to top up, say, part time work; have longer-term investments; and how to best fund your pension.

Lilyf · 10 August 2018 at 8:59PM

Thank you all for your input.

I hadn't put any deep thought about the landlord thing. I had presumed to leave it all to an agent but reading through that thread shows that's not really an option. It's just one of those things you hear that people are getting rich from buy-to-let empires it sounded a good idea in theory

(But you may find c.£300k (after house sale and cottage purchase) will not provide a sufficient return to live on comfortably, if that is your only income).

That's useful to know. I've only had low paying jobs so it seems a fortune to me, but I can see with how interest rates are it'll not provide much back.

Take it slowly - perhaps settle on a what you want to do,

Yes this is the problem. I used to live in London and dropped everything to come home for Mum in a sleepy village in the middle of no-where. I can't image going back to the London lifestyle now after living here a few years, but equally I don't have skills that are useful for a small village. Feeling a bit cut-adrift and lost. I didn't know about Carers UK, but I'll have a look thank you.

Thank you all for your help. I'll certainly be on the phone to speak to some IFAs on Monday.

bostonerimus · 10 August 2018 at 10:22PM

Buy to let can be a nice income source and also give you some capital appreciation. But it takes a little effort to be a landlord and there are plenty of associated costs and you need to approach it as the business it is. So if you down size to a 200k place that would give you around 300k to invest....how much income do you need? If you stick with guaranteed products like saving bonds you might get 2% (so 6k / year), but you might be able to double that if you take on some more risk and invest in some equity and bond market funds.

Lilyf · 10 August 2018 at 10:32PM

I would think that £1000 month would be OK? Rent/mortgage is the biggest expense so with that out the way the rest would just be household bills and general living. It's just me and Mum's cat so neither of us needs much.

I guess I need to budget and work that out accurately. Think this has just highlighted how totally unprepared I am.

Katiehound · 10 August 2018 at 10:49PM

I'm not going down the financial advice route (but I would get an IFA but for that you need to have an idea of your aims.)

I think you need to have a long hard look at just what you want to do- a wish list, a bucket list, call it what you will. This is an opportunity to maybe change your career.
You don't have to stay where you are, there are plenty of towns and cities that have lots going on but they are not London! You might fancy a market town, a county town, somewhere that is close to the country but has shops, culture etc. Property prices vary hugely from area to area.
IMHO BTL is greatly over rated- I wouldn't want someone calling me everytime the boiler stops (or whatever!) I already have things that happen like that in my own home!

Don't forget you can retrain, loads of online courses.
I would say use this as an opportunity,use your money wisely and enjoy it too.

Heedtheadvice · 10 August 2018 at 11:12PM

There is a lot for you to consider and soon after an emotional loss might not be the best time to make them. Take time to think things through before making any fixed decisions.

You are getting some excellent responses.

I would add that it takes a surprisingly large amount of finance to fund the income for even a simple lifestyle. Boston has indicated such with typical low interest rates. Some more risky investment can average 3 to 4 %, anything higher and they become increasingly risky and probably unacceptable so.

You should keep some cash account for an emergency fund.
Great you have no debts.
Pension should be a big consideration. As well as those you have, research maximising state pension.
A holiday (a couple of weeks a year abroad) could require £ 1k of your income -a big chunk of a small income!
Owning property is usually wise in the long term but can be surprisingly costly over short periods. As well as utility bills, council tax, insurance etc there will be planned and unplanned maintenance costs. As a Landlord renting out you can add to that considerably especially if you get a poor tennant. Compared with in extments there is a lot more work hence previous comments about it being a business!

All in all it could be that you will have skills and experience that enable you to get employment. That could solve some of the issues ....and give you something that occupies you and you find satisfying.

Good luck and do be optimistic but also realistic regarding what will seem a substantial legacy.

Overwhelmed by inheritence

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