what on earth to do with inheritence?

[marymaryquitecontraryusedtobeafairy]

I've been left a house which to sell now would bring me about 80K in the bank.

I'm poor. I bring in about 24K/year, and am in masses of debt. I just survive. I'm a mum and I work and get benefit top ups. I'm council housed in a dire part of the country, the house is in a slightly better area but I don't wish to uproot myself and children from school and home.

What do I do? Can this help me get out of the poverty trap? Do I live off the money? Live in the house and enjoy a secure home but remain in poverty? I can't afford to do the house up but can I possibly buy a very cheap or auction place, do that up and start flipping houses as my main income?

Look I'm not that bright but I've worked hard all my life and it's just not good enough financially. I decided to be a care worker because I enjoy it but the pay alongside the increase in prices has crippled me and there's no way to get out of it so I just trudge on day by day. I'm not miserable nor are my children but I don't want to waste this opportunity.

I don't have money for a financial advisor right now nor time to research so I'm hoping you clever and wealthy lot can help me out a bit with pointing me in the right direction.

Thank you.

To be fair, OP needs to realise losing UC shouldn't make her feel hard done by as if there was a GOD, she should be made to HAND OVER the £80K back to the taxpayers who not only pay all her multiple benefits, but are still her safety net once she has blown ( ok sensibly used) this £80K.

I respect that you say you don't know much, so please listen to those saying don't become a landlord; warning about house maintanance and repairs. You need a repairs fund and not be in poverty to own a house- unfortunately.

So the question is, even if you bought your Council house right now, who will pay for your maintanance, roof repairs etc in future? Those advising retraining and upscaling the career, no matter how hard you say it is, make the most sense.

So you earn £24k, pay no rent and get at least £500 per month from benefits, only pay £30 towards your debts....what the hell do you spend all your money on?

Martin Lewis would almost certainly say pay off your debts!

sell the house, pay off all your debts, do a few home improvements and maybe a few treats for you/kids. I wouldn’t think about flipping houses, there is money to be made but also
lost! You’re a carer, could you set up on your own?

I would sell the house and pay off your debts but then I’d just take some time and not rush into anything.

Enjoy this opportunity, I hope it changes your life in a positive way xx

Yes, what I said! You may not even legally be able to dispose of it too quickly ( like holidays etc) as it will affects your housing rights and benefits. Debts and education may the only be the only things you can sensible blow it on. Keep all the receipts.

It is a curse, not really a benefit to you, sorry.

Before making any decisions, it might be worth checking if there's a free legal clinic near you where you can get specialist advice:

https://www.lawworks.org.uk/legal-advice-individuals/find-legal-advice-clinic-near-you

You can search by area of interest e.g. 'welfare benefits' and postcode.

I'd take a list of all the current benefits you receive, and details on your debts. Perhaps discuss the options you're considering e.g. moving into the inherited house, buying your current home via 'right to buy' etc

If there isn't a clinic near you, it may be worth getting advice from StepChange and/or the CAB

Re. careers, this might be worth a look:

https://nationalcareers.service.gov.uk/

Also I wouldn’t buy your council house at this stage. If you do that most of the money will be gone. You can stay there forever if need to but if the boiler breaks they will pay, not you! If you manage to use the cash to increase your earnings then you can reconsider at that stage.

Is training as a nurse something that would interest you?

Id pay the debts off and look to retrain.

Not sure if anyone has mentioned this already, but the first thing you should do is check if there are any tax implications on (a) the inheritance (b) proceeds of selling the house.

Shes already on a debt management plan and pays £30 a month on 20k debts.
Her next move totally depends on whether its a debt management plan (informal agreement) or an IVA (legal agreement).
On the DMP she won't have to use the house to pay debts and depending on how long she has lived where she is then she could potentially sell the house and buy her current property with RTB and clear the debts, though financially she would only really be £30 a month better off. or choose to live in the house herself and take a lodger to increase income. I honestly wouldn't go down the rental route, especially without experience

The problem comes if she's on an IVA as it is a legal requirement that she declares the inheritance and it must be used to service debts, she has no choice in this.

Also as soon as she takes possession of the house the benefits she receives will be affected, as its classed as owning assets.

To rent it out has to be unfurnished, all stuff must be fire regs, fire doors etc....

Live in it and rent a room out.

Decor easy to change.

You seem to want to stay where u are so id sell the inherited house, pay off debt and then would you have enough to purchase your council house? You’d be in a much better place of security. Your benefits then shouldn’t change much because your incomings are same as before?

Any property with a mortgage that was taken out by the deceased will need to be fully repaid. This would have to be achieved by the OP taking out their own mortgage and pay off the balance outstanding on the deceased's mortgage.

By the sounds of it the OP will be unlikely to have a sufficiently strong credit rating to get a mortgage in the near term and with existing debt, it would put them in a worse financial situation.

they wouldn't be wise to relinquish their social housing, not with this relatively small amount of inheritance. £80K is not that much in the grand scheme, albeit it could make a positive difference to debt levels/elimination plus a good nest egg investment for the future. It depends how much debt there is to clear.

Beside the fact that Landlords are being screwed and now is not the time to become a landlord.

Are you actually allowed to have a council house while you already own another property?

@thecatsthecats ts

I'm afraid I am underestimating that as I can't imagine it. I've paid rent since 1999 when I left home. Would it not be cancelled out by repairs and insurance policies? I'm really not sure I would even be better off. My rent is 92 a week.

@MrsBennetsPoorNerves
House is mortgage-free. Rent is 92 a week. Debt is actually about 10K
I want financial security. I actually love my work and don’t want to stop it but am thinking about a different path in work. I just see this huge opportunity and don’t want to waste it.

Inheritance is free of tax for the beneficiary, all taxes will be liquidated out of the proceeds from the estate.

Sounds like the OP has been told that their actual inheritance value is the £80K based on their OP, so that's the actual amount they receive, and it wouldn't be their responsibility to sell the property, that's the role of the executor of the will, unless the OP is the executor and / or has agreed to assist.

Any fees relating to the sale eg estate agents, solicitors, disbursements are also settled through the proceeds of the estate. Stamp duty is payable on purchase not sale, so not relevant here.

If your debt is only £10K, that's more manageable. It could be paid off at £200 a month for 4 yrs, or is it £10k before interest? To me that's preferable to having a huge chunk of money in your account which will impact your ability to claim any UC at all, and to still be living in a rental when you've spent it all. Is the house in a decent enough state of repair that you could live there with just minor cosmetic improvements while you clear your debts?

It would be best to stay put in your current home OP.

if you settle your debts of £20k, you will have a meaningful amount of £60K to invest for the future for you and your DC. Your future outgoings will be much more manageable because you won't be servicing that debt.

It would be a very wise move to engage an independent financial adviser (IFA) so you can talk through the complete picture of your life, income, risk tolerance (for making investments aligned to high, medium or low risk, whatever you want) and aspirations for the future. In that conversation, mention that you'd like to finance some training for a new career, so that forms part of your financial plan.

Go with an IFA covered and regulated under FCA guidelines for your protection.

Their fees tend to be levied quarterly / half yearly via any Trust fund or investment plan they set up and manage for you so you don't need to pay at the time. They will declare the fee % before you decide to go ahead.

The aunt may have left the property to the beneficiary to do with as she pleases. In my mother's will, the wording was that the property should be sold after her death and the proceeds from the sale of the property after expenses o be split equally between my brother and me.

How old are your children? How many do you have? Do you drive?

Is this house where you'd want to live?

Even thinking about buying at auction is a no - you've got this one for free - buying and selling costs money.

Perhaps weigh up how much work it really needs. Move in. Use your current rent money to pay your debts quicker and learn DIY.

Definitely declare your inheritance, but only when it has actually been paid into your bank or building society account, not before.

What you don't want is for them to pull your UC yet, because probate can take many months to resolve. Meanwhile you don't have that money in your account, so you are perfectly entitled to continue claiming UC because your circumstances have not changed yet.

40 is not too old to retrain, I’m doing it at a similar age. You still have 28 years of working life left to state pension age so plenty of time to utilise new skills

I didn't make any assumption about terms of will as nothing was specifically mentioned in the OP, only that £80K would be their inheritance once the property had been sold. My points about inheritance tax and stamp duty still remain as they won't apply to the OP.

If you are only 40 and remain in your council rental, and continue to earn £24K + year, surely you will need to start paying all or more rent when your kids leave education anyway. If any leave home, you may be hit by the bedroom tax. Whereas if you move to this house owned outright, you will be improving your financial prospects in the long term.