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.

Technically. If shes on a DMP which is an informal agreement then she doesn't have to declare she has inherited the house. She could sell it and if she has been in her council house for more than 5 years (which she values at 90K) then the rtb price would be 61k max reducing by £900 every year after the 5.
She doesn't have to use the money to clear the debts. They are only costing her £30 a month and are interest-free. That way she can buy outright without needing a mortgage which she probably wouldn't get due to her high debt-to-income ratio.

She could bank 16k at 4% interest which would cover the debt payment and bring her below the UC savings cap so she still receives her UC (minus the housing element). Anything above the 16k left over (prob won't be much with fees for selling etc) can use for cars/white goods which are allowed.

This achieves a few things.

It gives her a rent-free home, which is important, especially as her children will age out of the Child element of UC at some point and her income will drop and she will have to cover her rent.
She has a savings buffer to cover any unexpected housing costs or chose to make final settlement offers on the debts (get advice on this, you can potentially offer less than the debt actually is, sometimes they will accept it) though I don't see the rush too as they are costing her buttons. plus she has peace of mind having that buffer.

Ex council properties on a rough estate near me go for about £100k for a 2 bed / £120k for a 3 bed, has OP even said how long she’s lived in hers? If 5 years then she’d get a 30% discount.
She wouldn’t have enough to buy outright with £75k ( after conveyancing fees etc) even she got some cracking full and final debt settlements of 50% of the true debt, which she won’t unless she’s on a self managed DMP and only pays token amounts AND the the debts have defaulted and been sold on. She would have between £55-£65k so would need a poor credit mortgage at a probable 9-10% rate for the remaining £20k+.
Which for say £25k would be £200 a month for 25 years. Even at 6% it would be £160.

I realise all this is futile because OP hasn’t bothered to say how much servicing her debt is costing, could be a fiver, could be £500 a month.

She won’t give ANY details which leads me to think we’ve all wasted our time.

It’s opened my eyes to realising just how many people have no clue about financial matters surrounding inheritance/ benefits and winding up an Estate.

She said earlier that her debt repayment is only £30 which if that's the case I don't understand why she wasn't recommend a debt relief order rather than a DMP

And once she's lived in the property a certain amount of time, she could potentially sell it and buy a more suitable property (with mortgage obvs).

You can sell the home you're living in and use the funds to buy a new one without it affecting benefits. I'm just not sure how long you need to live in an inherited house for it to be classed as yours and not raise questions from DWP.

I’ve obviously missed the part about debt payments being £30 a month!

If she’s with a Debt management company, she would HAVE to go self managed as they would insist she paid off the debt if she told them, if she didn’t tell them, she would be paying £30 forever and have a permanently trashed credit record.
I spent a lot of time on the DMP board of Moneysaving expert when my Sister had a mountain of debt.

Having read most of this you are indeed in a tricky situation. Remember, if you have a lot of debt you cant pay you're unlikely to get a mortgage at this point.

Call the council & ask about buying your house, dont mention the inheritance.

When you get the info then call & ask what if you came into some money as you could possibly be doing sometime soon, would it make a difference.

You need to have all th information before you make any decisions.

And a boiler is much more than a grand!

She's not legally obliged to tell them. That only applies to an IVA or DRO.
And tbh if £30 is all she had left after allowable expenses then having a trashed credit reference probably isn't a bad thing. She can't afford to take on any debt.

See if you can put a buy to let mortgage on it. We did that with a property we owned out right. Our credit was crap but the lenders don’t care with buy to let as much as the rental income will cover the mortgage payments. The rent we get from our property pays for both mortgages and we borrowed 100k to pay off our debts, do up our house etc. might be worth looking in to.

Ah thank you sorry I got that wrong about stamp duty and estate agent fees. Long time since I bought a house

I’d pay off my debts first and ask for full and final settlement deals. I’d then look at right to buy on my council property - if you are going to be free from rent and not receiving Housing Ben etc.

Clear your debts and invest in training so as to secure a better job. You mention that you're 40 - you still have over 25 years of work ahead of you so use this opportunity to get into something that you enjoy and is better paid.

In the nicest way, stop thinking of benefits as the main source of income. Start trying to think about how you can earn better money by investing in yourself.

A key issue is that once probate goes through she HAS this asset. I presume she doesn’t lose benefits until it becomes a liquid asset but nonetheless she must be making herself potentially ineligible for council housing at some point because she owns a property. Unless she refuses to inherit, those are facts. I think she needs expert advice and I don’t think “wanting to retain benefits” will cut any ice with any official. She’s £80k OR a house better off. If she makes the house over to a third party like family she’s still got insurance, council tax etc to find. If she loses every penny down to £16k I think there isn’t any choice other than to move into it but she needs CAB or similar to go through it all with pros and cons fully costed.

id def pay off debts and use remainder to train as a nurse. Do what u already love doing but get paid better x

option 1 - pretty clear to me is move to the house in a nicer area as long as it is mortgage free. Sounds harsh but breaking out of a less nice area can be a game changer, you and the kids will always have fiends in the old area mo need to be strangers). You may still get council or benefits top ups
Option 2 - clear your debts, surely clearing that will get your life back on track, without massive debt commitments
Option 3 - treat it as a nest egg and invest in you and your kids (ISAs at 10k each, forgotten the limit for a junior ISA) and then pay off the debt with the highest interest. The rest you can save
Some mix of both but savings will impact any topups
Any IHT issues

UC is made up of’ elements’ Soo you get the basic element based on if you are single or a couple, then they add
on extra elements like a list, for which you get extra money for example responsibly for children, (and how many) , if any one in the house hold is Ill, if you have LCW (limited capability for work) , if you are a carer, if any children are in further education. They will also reduce money for other circumstances (income from renting out a room, paying back DWP loans or overpayments, paying debts direct or water etc)

So @marymaryquitecontraryusedtobeafairy what are you going to do

Probably disappear into the ether like all the other timewasters?

😂😂😂

Its true though

Annoying when posters give time to reply

And op ignores questions

Ring Citizen's Advice, now known as Consumer Advice as you may have to declare it to HMRC and your benefits may be removed or reduced. Do not sell and use money to reduce debt until you have cleared it with HMRC and CAB as that could land you in serious trouble.

You would have to pay tax on the income from renting out a shared house and it has to be kept up to a certain standard. The council will have a right to inspect it and who will pay the water, electricity and gas bills plus WiFi and council tax. In a shared house you would have to bill each person separately for 1/3 share of all the utility bills and if they don't pay or one of them leaves, the others will have to pay a bigger share or you will have to pick up the slack. Then there is buildings insurance to pay (your responsibility) and council tax (either you or divided among tenants) and you'd need to decide whether you or the tenants pay for the garden to be kept tidy.

There's more to letting a property than just getting a few people in the rooms. It needs to be gone into in depth with Citizen's Advice.

What’s Hmrc got to do with receiving benefits?
Honestly, I don’t know why people comment when they don’t have the slightest clue.
Even the much mentioned savings limit of £16k is WRONG, it’s actually £6k before you start to lose means tested benefits. You lose £17ish a month for every £1000 over the £6k, So £174 of Universal credit for £10k over.
Housing benefit is also affected by savings over £6k, unless you’re a pensioner, when it’s £10k.

https://www.homesellingexpert.co.uk/guides/will-inheriting-a-property-affect-my-benefits

4.1 Do you have to disclose an inheritance to DWP?

You should always disclose an inheritance and report any changes in your circumstances to the DWP and the relevant benefits department as soon as possible.

If you do not let the DWP know about a change in your circumstances, which includes inheriting a property, you could be:

• Paid too much, which you may have to pay back and will be deducted from your future benefits
• May have to pay a £50 penalty

If you deliberately attempt to conceal your inheritance, you’re committing benefit fraud and could be:

• Fined (between £350 and £5,000)
• Prosecuted for benefit fraud and receive a criminal record
• Lose your benefits for up to 3 years
• Given a prison sentence

4.2 When should you disclose an inheritance to DWP?

You should report any changes as soon as possible and, in any event, within one month of the change in circumstances."

Very useful site, BorgQueen. Hope the OP and responders study it carefully.

Whatever you do don't listen to sob stories of others who want to leech off you futhermore don't sell the house rent it out

Sob stories, it's only £80k.

DWP (Benefits) isn’t HMRC (Tax office) I was specifically responding to whoever mentioned HMRC upthread. Details are important.

Who are these idiots who keep saying ‘rent it out’?
Rent on an £80k house is likely to be £500 a month if you’re lucky. £6k a year, from which you have to pay tax via Self assessment, a yearly Landlord safety check, Buildings insurance, Boiler/ plumbing/electrics cover. Replacing cooker / hob or built in appliances. A sinking fund for redecorating between tenants, replacing the carpets/ roof / boiler etc.
All the hassle from tenants who may not pay or who might trash the house and do a moonlight flit.

You would be lucky to see £3k profit.
That kind of house will never see massive gains either, it’s not going to provide much of a pension, especially after CGT will be due on selling.
Mine has only just about doubled in 25 years, because it’s in a ‘cheap’ area - even though it’s a very nice house in a quiet cul de sac.