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DH about to inherit largish sum, what to do.(42 Posts)
So..as the title say, my DH is about to be gifted just over £100k. To me this is a massive amount of money and it's far more than we have ever had.
Just don't know how to deal with it or what to do? It's come out of the blue but they sold their old house which has been rented out for some time and are giving a lump sum for to each child. The sum will be going into a trust fund which DH can access immediately.
It's not enough to buy a house locally and I need to remain in this area as my son is autistic and all his support is here.
We have had several discussions about this money as it worries me. DH isn't very good with money and it can burn a hole in his pocket.
So plan is to pay off any debts...not many thankfully...less than £5k.
We will also update my car (I only paid £100 for it and it's on it's last legs).
DH's car which he uses for his business is also needing work and also very old. So he will update that...neither updated car will be new.
The house needs some work...new flooring in the living room as the carpet is at the end of it's life and we will have a new bed.
Beyond that though we will be looking to save the money. DH doesn't have a private pension. We live in social housing as our income is not that high so there will be no new kitchen or bathroom because we are not allowed to do that.
There is already provision for DS in his adult years (thanks to my in laws) and we want to add to that ideally.
Would a financial advisor be worth seeing?
What I don't want is for DH to squander the money. I think the best idea is to put as much money as possible into an account which has limited access. That way we can take a percentage to do the things DH wants to do but the bulk will be secure. Or can trust funds be altered to allow for this? Anyone know?
Pay off the mortgage surely!
Op said they live in social housing
(not sure if this impacts upon being in social housing though?)
PUt it in his/your pensions.
If he is likely to squander it I would spend it on property. Even in a hard to access account the temptation to buy cars or other expensive items would be hard to resist.
ThisIs OP has stated she lives in social housing, so there is no mortgage to pay off.
I would definitely see a financial advisor in your position. Putting some of the money into a pension sounds like a good idea.
Who are the trustees of the trust fund? What are the terms of the trust? In situations where there is a trust, it is usually the trustees who decide how to invest the money.
Yes no mortgage as we are in social housing, ironically we DID have a mortgage but ended up having to sell when DH was ill and out of work. Then DS was diagnosed and it was just a difficult and messy time.
We've been in our current home for the past six years.
The money won't impact upon our tenancy as we cannot afford to buy anything here on the open market. We need to stay local for DS's school and support.
My thought is pension as he doesn't have one. I do and can access it at 65 and it's a good one. DH has nothing though except a small pension from working . He is now self employed.
The thought that the trust fund might have Trustees is a good thing as it might slow DH down. I am not totally sure of exactly what this trust fund is and I don't think DH is too sure. Could DH potentially be the Trustee? Or don't they work like that?
There is a trust fund for DS when he is older for education purposes. I know DH and his siblings are Trustees for that when the time comes.
Financial advisor it is then. DH is hopeless with money but I think even he sees this is something he doesn't want to mess up. I will discuss again with him.
Hmm I would consider shared ownership - would £70k buy 50% or more of a suitable home outright and then rent the rest - or part mortgage/part rent???
Definitely see a financial advisor. There are investment funds that you could put your money into and earn an income from it. I know of a prudential fund that averages 6% growth but allows you to withdraw 5% - from £100,000 that would be £5000 a year, which you could take annually or monthly. The capital would be safe but you would still be benefiting from it.
It's not impossible for DH to be a trustee and also beneficiary of the trust, but that seems unlikely. It would be a good idea to find out who the trustees are and the rules of the trust.
buy a buy to let property, even if only a flat.
Then you will always have the money there if you need it and it will provide a small income.
I think you can still put in a new kitchen and bathroom if you get permission to do so - and if you are going to live in the house forever that would make sense.
they sold their old house which has been rented out for some time
Has the seller of the house factored in the fact that they may need to pay capital gains tax?
Thanks all, just had a chat with my MIL about things as DH is so vague.
So the money is indeed going into a trust fund but DH and his siblings are Trustees so he will be guided a bit (they all have a great relationship so there will be no issues with this).
Yes MIL has factored in CGT.
I will look into shared ownership locally but suspect we will still be priced out of the market.
Feel a bit better now. I didn't sleep last night because I was worried about how DH would be with it all. He is in his 50s but he was the youngest of five so they have babied him....trust me it's been "entertaining" making sure he grows up. He's been settled, stable and really supportive for many years now and we've worked well together as a team to support DS. A sizeable amount of cash could be a game changer and not in a good way...I don't need that right now.
Am looking at a couple of work related courses he could do which would help him expand his business ...just to keep him grounded.
I have recently gone back to work so that although our income isn't great we now no longer need any benefits beyond a small tax credit allowance. Just want to keep improving on that
Depending what you do with this sum of money it will could wipe out any tax credits you are entitled to, as you need to declare any interest over £300 that the money earns. So if for example you put it all in the highest earning account ( not that any earn much) and got £1.5k interest over a year you would need to declare that.
How much it affects your tax credits depends obviously on your wages and how much you get.
It perhaps won't affect them in the first year as you can earn £2.5k more without tax credits being affected, but if it continues to build interest it may affect your award in subsequent years.
What does your DH want to do with his money?
That level of savings will absolutely wipe out any entitlement to Tax Credits.
Anything over 16K will.
The interest itself will be treated as income but the capital will wipe out entitlement to any means tested benefits.
I hope you enjoy it OP!
Silly as it sounds, these days you don't get much interest on that amount of money, probably about £20 a week interest, once you've spent on the cars and house.
user Tax Credits doesn't take in to account savings as far as I'm aware.
What about a holiday OP.
Light years -your right! Sorry got mixed up
Yes we will have a holiday but due to work commitments this will have to be in the UK. I don't care as we haven't had a holiday for years so am quite happy. We won't be spending ££££ though,
Got to wait and see now what form this Trust fund takes, I gather there are several types.
DH has said he just wants to do a few things like replace the cars etc and then put the rest away for DS.
I won't get too involved beyond helping him with investing it in a pension or whatever. It's his money and it will be his decision ...I just know that we are more settled than we have ever been. We earn enough to cover rent, council tax and all other bills. We guessed we would lose the tax credits so that's not a problem. I just don't want it to cause a problem but MIL has reassured me a bit with the info about him sharing a trust fund with his siblings. I hope that I can just keep him grounded that's all.
The money may not be available for a few weeks yet so there is still time to talk about things.
Your plan to do the things you mention and put money away for DS sounds reasonable, but in your first post you seem to be concerned that your DH will fritter the money on a few years of extra treats and not have much to show for the money.
Is there any scope/would you like to buy the property you are in - do you see yourself living there long term or if you got it at a big discount, you would be able to reduce the cost of any future move by having a lot more equity?
Putting a big sum away in savings will get it destroyed by inflation. You need to invest - but the market is at record levels.
See an I f a .
Definitely an IFA who is a pension specialist.
Your husband is self employed so he has the scope to do interesting things with pension contributions - and as he's 50 he wouldn't even be tying it up for long. With an IFA and accountant input, he could be paying very little tax for the next 5 years - possibly much better return than a stock market that is at a high.
This isn't an inheritance, is it? This is his parents downsizing and wanting to pass money on to their children whilst still alive?
If yes, I would take some tax advice - some info here.
If you claim benefits at all you may have to inform them if it's means tested.
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