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.

Stay put. Do not give up your secure tenancy.
Sell the inherited property.
Pay off your debts.
Put the amount that you are allowed in savings into a rainy day fund for emergencies.
Buy good quality items for all the things you need and aren't provided by your landlords eg kitchen white goods. If you run a car that is at all elderly/unreliable upgrade to a newer one - potentially a self-charging (non-plug-in) hybrid which is cheaper to run. Spend on anything else that will reduce your outgoings in the long term.

When you've done all that you will probably have about £30k left - I would put that into a pension as I believe pensions do not count towards the savings limits for benefits. The pension pot will provide a little boost to your long term income when you retire. When you retire you should be able to set the amount you draw out of your pension each year to be low enough that you stay under the tax threshold.

If the terms of the will determine that the property should be disposed of by the executors before the estate is wound up and distributed to the beneficiary or beneficiaries, then I think it unlikely the OP would be considering moving into the house or becoming a landlord and renting the property out.

She would have been told by the executors whether the property will be transferred to her name via the land registry (assuming she accepts the bequest) or whether the property will be sold and she will receive money instead.

If she doesn't know which then she needs to find out from the executors and request a copy of the will.

Whats the rush to pay off debts? They are only costing £30 a month, so paying them off isn't going to give OP a better monthly income. In fact, you could invest that inheritance money and cover the monthly payment from earned interest and retain the 80k.

None of that matters anyway, without knowing what kind of debt management plan OP is on. Because the decision may not be hers to make. She may be forced to sell the house depending on what her debt agreement is. Until she talks to her debt advisor, no decisions can be made.

First your debts were 20k, now it's 10k -which is it and what is the debt management plan?

Those telling you a house costs a fortune to run are obviously renters. How much have the council done to your property in the last 5 years?

A boiler will last at least 5 years - mine is at least 25 years old. I pay nearly £100 a year to have it serviced. Insurance will be £10-15 a month - what do you currently pay for contents insurance? You can learn to paint yourself, the children can help if old enough (you still havent said) and if the windows/door are UPVC they dont need painting anyway. Is the house rendered, if so that needs painting every few years? Does the roof look sound, it should last 80 years?

Houses are only money pits if they are in very poor condition to start with, or you want to change your kitchen every few years.

You would be mad not to move into that house. You say it's in a better area and is sound. You would keep the child element of UC and wouldn't need the housing element as you would have your own house. Renting it out is not a good idea, it's getting more and more difficult to be a landlord and you need to either be good at house maintenance or have funds for emergency and upkeep work. You have neither, you have debts. On top of that you will need to file a tax return every year and you will lose your benefits as you have an income-producing asset that isn't your home.

This is probably your only chance at proper security and having something to hand on to your children. If you want to change your life and your children's you need to re-train and earn more money. The NHS is crying out for workers, think about getting a job where you have more prospects. Carers are amazing but they are poorly paid and it's hard work with few prospects.

I’d sell the house, pay off your debts and then maybe investigate access courses at local unis with an eye to doing a degree when your children are a bit older.

If you’ve got a Council house stay in it as your rent remains low, you get secure tenancy and you get someone else sorting out the repairs.

Keep quiet about your inheritance; you don’t want anyone diddling you out of your money or “borrowing” it. Keep it in a savings account with a respectable, known place like a high street building society. Don’t invest it if you don’t know what you’re doing.

I’d look to retrain then keep that money as a nice nest egg to ease you through the years of young children, and anything left for your retirement. Being debt free then working in a job with a decent pension should be the goal.

Poor OP's head must be spinning at the wealth of conflicting advice here...

If she did that she’d be committing benefit fraud.

Firstly you have to tell DWP about this inheritance immediately as it is a material change of circumstances.

Then contact your local Citizens Advice Centre. They’ll help you plan a sensible way forward. https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/search-for-your-local-citizens-advice/?q=Blyton%2C+Gainsborough%2C+Lincolnshire&c=SERP-BUREAU

All the best

OP - how wonderful for you, though I completely get your overwhelm and confusion. Definitely pay off your debts. I LOVE how passionate you are about your job, and your current home. Perhaps focus equally on what you love and what needs to change in your life for YOU to be happy. The debt needs to go, but do you really want to move or be a landlady? Also, there is more to life than owning a home - it can be wonderful, but I’m just saying it’s ok to make a decision to stay in a council house or to rent privately elsewhere. I would try doing one of those Wheel of Life exercises to better understand what is important to you. Use the money to build on the things you love to get you more financial security and move away from what doesn’t make you happy and isn’t working for you. Also, I wasn’t sure if you meant this, but I absolutely would not stop working and live off the money - it wouldn’t last you that long and you’ll end up deskilled.

Pay all your debts, you have this chance to be debt free

I'm a landlord. Not a HMO but i do not pay 100 a month insurance. I think my landlord insurance is about 250 a year. 3 bed semi.
However OP has said that the decor is dated. So she will need to factor in redecoration. Where is that money going to come from?
Another thing to consider is the epc certificate. Currently needs to be at least E. But this is changing soon to C i think it is.
Electric and gas will need checking and you will need certificates for these.
You will more than likely have to pay council tax from when the house is yours.
You will also need to factor in a cushion of money for repairs like a new boiler. Yes you can save up from the rent you get but what if the boiler breaks in the first few months.
In your position i would sell and invest.

Martin Lewis recommends paying debt before having savings. He has NEVER advocating selling a house to pay off debt! He also warns against turning unsecured debt into secured debt by taking out a mortgage to pay it off or extending an existing mortgage.

I have a feeling that the people advocating selling the house are probably renters, whether private or council. It is a short-sighted aspiration to have savings that will run out in 5 years, holidays, new furniture etc. You no longer need a secure tenancy; you have a house which you own outright! Congratulations, that’s amazing!

The security that would come with a house fully paid without mortgage, which will grow in value should not be underestimated. You will leave an inheritance for your kids which will enable them to also get a mortgage, the knock on effect down generations can never be matched through cash savings.

Added to this as a PP said, location, location, location. You said this house is in a better area, that’s a superb bonus. 3 bedrooms too, so you could decorate it / diy it and down size when the kids move out, giving you cash for your retirement.

This x a million. Ignore everything else @marymaryquitecontraryusedtobeafairy.

Yes this, if the house deeds are going in your name move in, it would be very stupid to sell an asset to pay off debts unless you have to due to iva.

From what I gather from Other posts about uc

You have x amount rent then x amount uc from what you earn. Which is lower end

If no rent then x amount uc would be more as not paying rent so you get a higher allowance

So no you won't get rent element but will get more uc to pay bills as no rent

Prob not making sense in explaining

You are saying your rent is mainly paid by uc so won't benefit anymore

But if you sell the house then savings will be over £16k so won't get uc anyway

I’m wish the people telling the OP to sell the only asset she has and pay off her debt would stop. If she sells the house she loses her universal credit until she’s spent all her inheritance down to the allowed amount just to pay off a debt that is only being paid back at £30 a month. If she keeps the house and moves in it will appreciate in value over time, she will be in a better area and she will still be able to keep the child element of UC. She may not be able to feel much day-to-day benefit for a while but the future benefit to her and and her children will be massive.

To improve her earning power and make her life better day-to-day she needs to re-train.

Never take short-term gain for long-term pain.

She doesn’t want to move in to the house/relocate. Home ownership isn’t the be it all and then she would be no better off. She’d still be in debt, wouldn’t have the money to perhaps invest in retaining. Her council house is stable renting, it would be different if it was private rent. Relying on UC will never allow her to move forward. To use your own phrase
Never take short-term gain for long-term pain.

@marymaryquitecontraryusedtobeafairy how old are kids and how far away is inherited house

@witnessprotection73 So you recommend selling off an appreciating asset and losing UC to pay off some debt that’s not causing her any issues and ‘invest’ in training? Not all training costs a fortune and the OP has transferrable skills anyway. She doesn’t want to move but that doesn’t mean that not moving is financially a good choice.

@WarmBeerAndSandwiches I’m not suggesting she invests the remainder in training in fact I think she should consider becoming an independent carer. She’s 40 so where is the benefit of keeping a house that she doesn’t want, in an area she doesn’t want to live in, still in debt, still in low paid job with no savings? When the house needs work where is the money coming from? Oh and I believe if you have an asset it effects your UC anyway!

Would OP still be entitled to live in her council property if she owns a house? She might not have a choice but to move.

Is the area the house is in better than yours generally and for schools?

Perhaps in a few years it would be worth moving there for that whilst renting it out in the meantime.

@witnessprotection73 that's not right with regard to ownership of the house. If she sells the house she will have to use most of the sales proceeds to live on until she reduces them back down to the level allowed for UC so she will lose her state income. * But if she lives in the house it will be disregarded for the child element of UC and she won't need her rent paid as she will have a house, so no loss there. This means she will retain her income and own a house that will appreciate in value. *

Selling an asset and gambling it on retraining or using it as a safety net for setting up your own business is very risky even if you are good with money and wouldn't be tempted to fritter it away. Retaining an appreciating asset and attempting to retrain anyway is a far safer option. She could become an independent carer without any training as far as I'm aware so could do that now regardless of the inheritance. I'm an accountant so will always look at the financial implications and the inherent risk/reward in all the options. Others may look at things differently.