Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • cambb
    • By cambb 7th Aug 18, 5:21 PM
    • 179Posts
    • 4Thanks
    cambb
    What to do with inheritance
    • #1
    • 7th Aug 18, 5:21 PM
    What to do with inheritance 7th Aug 18 at 5:21 PM
    Hi,
    Just about to inherit approx 200k and was wondering what to do with the cash. I'm currently 50 with a pension worth approx 650k + 15k annually going in and the wife with a final salary pension. We both will have max state pension credits by retirement. Looking at retiring in 7 years time when 2 kids have been through Uni. We have no ISA's and approx 20k savings. Looking at maybe 100k long term ie 5 years and 100k easy access ish. Any ideas or advice please?
    Thanks in advance
Page 1
    • xylophone
    • By xylophone 7th Aug 18, 5:39 PM
    • 26,125 Posts
    • 15,483 Thanks
    xylophone
    • #2
    • 7th Aug 18, 5:39 PM
    • #2
    • 7th Aug 18, 5:39 PM
    It would appear that you and your wife are well provided for now and in the future.

    How old are your children now?
    • cambb
    • By cambb 7th Aug 18, 5:58 PM
    • 179 Posts
    • 4 Thanks
    cambb
    • #3
    • 7th Aug 18, 5:58 PM
    • #3
    • 7th Aug 18, 5:58 PM
    They are 19 and 17. They have both inherited 30k each as well.
    • Linton
    • By Linton 7th Aug 18, 6:04 PM
    • 9,569 Posts
    • 9,780 Thanks
    Linton
    • #4
    • 7th Aug 18, 6:04 PM
    • #4
    • 7th Aug 18, 6:04 PM
    Perhaps you should look into investing some of it in funds of shares. For large sums of cash you may not get sufficient interest to match inflation.


    If you want to consider investments of some form with a pot of 400K it would be worthwhile talking to a local IFA.
    • xylophone
    • By xylophone 7th Aug 18, 7:34 PM
    • 26,125 Posts
    • 15,483 Thanks
    xylophone
    • #5
    • 7th Aug 18, 7:34 PM
    • #5
    • 7th Aug 18, 7:34 PM
    They are 19 and 17. They have both inherited 30k each as well.
    Even so, it could be that now is the time to make gifts.

    Perhaps contribute to a LISA for the 19 year old and for the 17 year old in due course?

    Contribute to a stocks and shares ISA for you and your spouse?

    https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

    http://monevator.com/using-vanguard-lifestrategy-funds-life/
    • kidmugsy
    • By kidmugsy 7th Aug 18, 10:05 PM
    • 11,387 Posts
    • 7,912 Thanks
    kidmugsy
    • #6
    • 7th Aug 18, 10:05 PM
    • #6
    • 7th Aug 18, 10:05 PM
    Just about to inherit approx 200k and was wondering what to do with the cash.

    I'm currently 50 with a pension worth approx 650k + 15k annually going in and the wife with a final salary pension. We both will have max state pension credits by retirement. Looking at retiring in 7 years time ... We have no ISA's and approx 20k savings. Looking at maybe 100k long term ie 5 years and 100k easy access ish. Any ideas or advice please?
    Originally posted by cambb
    Pensions:
    (i) if you are paying higher rate tax consider contributing enough so that you avoid it.
    (ii) consider contributing to a personal pension of some sort for your wife. That way she might find herself able to retire early without any need to start her DB pension early with a corresponding actuarial reduction.

    S&S ISAs: fill two and contemplate what to invest the money in. If your current pension is virtually all in equities I'd suggest you diversify. Commodities, maybe?

    Gold Sovereigns: consider seriously - no VAT, no CGT, and no income tax (obviously). Read up about them on the Royal Mint website and then consider shopping around.

    Cash: are you both using your annual savings interest allowance (1,000 for basic rate taxpayers, 500 for higher rate)? If you have spare capacity use as much cash as you can to earn interest that beats CPI inflation. After that ... well, if your allowances become fully used consider Premium Bonds - they pay out prizes tax-free.

    Children: read up on a Deed of Variation/Instrument of Variation. This lets you divert all or part of your inheritance to them while it is treated for IHT purposes as coming direct from the will of the deceased. In other words the diverted capital won't form part of your estate for IHT purposes. (Gov.uk provides what is virtually a template for such an instrument, so that you could write it yourself.) If you are loathe to trust the youngsters with any of the money you could alway direct it by IoV into a discretionary trust that you would set up. The beneficiaries would be yourself, your wife, your children, their children, ... You and your wife could be the trustees. The trust, however, would need managing, and it might have tax liabilities that a youngster wouldn't. There are ways round that for a smallish trust but then you are in the world of paying for expert advice. Anyway, you have two years from the death of the deceased to set up the IoV, which might give the youngsters a bit of time to grow up.

    And once both are 18 such a trust could lend them money which they could save/invest tax-efficiently because they wouldn't be taxpayers.
    Free the dunston one next time too.
    • atush
    • By atush 8th Aug 18, 11:47 AM
    • 17,002 Posts
    • 10,623 Thanks
    atush
    • #7
    • 8th Aug 18, 11:47 AM
    • #7
    • 8th Aug 18, 11:47 AM
    Top your pension up to 40K contributions (if you eaarn that much) and use up the last 3 years unused allowance. Open a PP or Sipp for the wife, or max out her AVC.

    Open 2x S&S isas.

    Gift money to children

    replace any major items worn out like white goods and even a car. Do essential home maintenance.
    • bostonerimus
    • By bostonerimus 8th Aug 18, 12:25 PM
    • 2,130 Posts
    • 1,448 Thanks
    bostonerimus
    • #8
    • 8th Aug 18, 12:25 PM
    • #8
    • 8th Aug 18, 12:25 PM
    Pay off any high interest debt,
    Put 6 months to a year's cash spending in the bank for emergencies
    Maybe pay down your mortgage
    Maybe contribute more to the pension
    Maybe use ISA allowance and buy a multi-asset fund or a diverse mixed of equity and bond funds.
    Misanthrope in search of similar for mutual loathing
    • cambb
    • By cambb 8th Aug 18, 4:22 PM
    • 179 Posts
    • 4 Thanks
    cambb
    • #9
    • 8th Aug 18, 4:22 PM
    • #9
    • 8th Aug 18, 4:22 PM
    Thank you for all the help and advice.

    Better get some reading done!!
    • cambb
    • By cambb 8th Aug 18, 4:55 PM
    • 179 Posts
    • 4 Thanks
    cambb
    Some questions:-

    Yes i am a higher tax payer and was looking at putting my annual bonus going forward into my pension about 8k a year + any yearly pay increases.

    Ref a SIPP for my wife. Say she invested 400 a month into a SIPP is tax relief add to the 400 from the SIPP provider?

    The bulk of my pension is invested in the Pru growth fund D not sure if that's equities?

    We owe about 100k on mortgage which is fixed for 3 years @ 1.85% so might start over paying that as well?

    Thanks again for the help
    • kidmugsy
    • By kidmugsy 8th Aug 18, 7:01 PM
    • 11,387 Posts
    • 7,912 Thanks
    kidmugsy
    By the way, when the money arrives don't leave it sitting around in a current account in your own name. Only 85k would be covered by the insurance scheme. If you open accounts at ns&i the lot would have a Treasury guarantee. That will give you time to think.

    Ref a SIPP for my wife. Say she invested 400 a month into a SIPP is tax relief add to the 400 from the SIPP provider?
    Originally posted by cambb
    Yes, they claim it from HMRC for her. If your wife is a higher rate taxpayer too, she should report her gross contribution to the SIPP to HMRC and they will lavish her with more tax relief.

    We owe about 100k on mortgage which is fixed for 3 years @ 1.85% so might start over paying that as well?
    Originally posted by cambb
    If you like: how much are you allowed to overpay? 5% per annum? 10%? It seems a usefully low risk investment if you don't (wisely, in my view) want to pile into equity investment at the moment.
    Free the dunston one next time too.
    • xylophone
    • By xylophone 8th Aug 18, 7:06 PM
    • 26,125 Posts
    • 15,483 Thanks
    xylophone
    Basic rate tax relief is claimed by the SIPP provider.

    If your wife is a higher rate tax payer she should contact HMRC.

    https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

    https://www.telegraph.co.uk/pensions-retirement/tax-retirement/annual-pension-allowance-avoid-getting-caught-year/

    https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/annual-allowance/

    Does your wife's DB scheme offer an AVC option?
    • Audaxer
    • By Audaxer 8th Aug 18, 8:11 PM
    • 1,232 Posts
    • 738 Thanks
    Audaxer
    Looking at maybe 100k long term ie 5 years and 100k easy access ish. Any ideas or advice please?
    Originally posted by cambb
    5 years isn't long term, so if you invested 100k it could be worth less than that in 5 years. If you are going to invest 100k and take income from it that is perfectly possible in the short term, but if you need to draw out most of the capital in 5 years, I wouldn't advise investing it. Instead I would be looking for the best fixed term savings accounts unless I was prepared to leave it invested for at least 10 years.
    • jaybeetoo
    • By jaybeetoo 9th Aug 18, 7:59 AM
    • 615 Posts
    • 289 Thanks
    jaybeetoo
    By the way, when the money arrives don't leave it sitting around in a current account in your own name. Only 85k would be covered by the insurance scheme.
    Originally posted by kidmugsy
    You may be covered by the temporary 1m protection for 6 months.

    https://www.fscs.org.uk/what-we-cover/questions-and-answers/qas-about-temporary-high-balances/
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

35Posts Today

4,323Users online

Martin's Twitter
  • Ta ta... for now. This August, as I try and do every few yrs, I'm lucky enough to be taking a sabbatical. No work,? https://t.co/Xx4R3eLhFG

  • RT @lethalbrignull: @MartinSLewis I've been sitting here for a good while trying to decide my answer to this, feeling grateful for living i?

  • Early days but currently it's exactly 50 50 in liberality v democracy, with younger people more liberal, older more? https://t.co/YwJr4izuIj

  • Follow Martin