What to "do" with inheritance

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I have a query about investments.

It looks like I will be coming into something like £180k, following the death of my wonderful mother. I (obviously) have very mixed feelings about this money, as I'd rather I wasn't getting it and - perhaps for that reason - have been having difficulties making sense of what to do with it. Can I pick your wonderful minds, please?

This is a brief summary of our financial position - and I do realise how lucky I am, and how "lucky" I am to be getting this money, but as I say very mixed feelings about it.

Married, 53, 2 kids (1 at uni, 1 mid-GCSEs). We have a mortgage free house (thanks to another inheritance on my dh's side 😢) and a buy-t0-let property on a repayment-only mortgage of £140k. We have what used to be good work-pensions, and have been buying AVCs over the past 5 years or so. But our pension scheme has undergone changes, so maybe these aren't so good anymore. We have about £40k in savings (cash ISAs). Both kids have about £10k in savings (and we recently handed over eldest's to him to manage). Our combined incomes are £135k. Our biggest outgoing has been private school fees, but we only have another year of that for one child.

My sense is that I would like part of my mum's money to go to educational costs for my kids, so they leave Uni without debt. I also want to use some of the money for "treats", which for us means travel. I can't decide if I should be using the money to pay off the BTL mortgage, or leave that and buy another BTL property, or invest all of it (where?) so that we have an income from it, or investing part of it and putting some aside for said "treats". I really don't know where to start, or how to decide.

Many thanks in advance for any advice...

do not give away capital to pay off Uni debt! Rarely a good idea. Giving the kids the capital as a lump sum is far better. Read Martin Lewis on this matter.

Get an IFA it will be money well spent.

You need a good Independent Financial Adviser, but I certainly wouldn't blow it on paying off student debt. By the time both kids have gone through uni that would mean there would be little left over anyway.

Keep it and invest it for the benefit of the whole family.

Sorry for your loss. We are in a fairly similar set of circumstances to you (54, two kids one in uni and one in GCSEs, similar income although a portion of ours is from multiple BTL, private school fees for another couple of years, small mortgage on our own property). If we came into that sort of money I suspect we would explore another BTL (or two) possibly with a small interest only mortgage - I think it is helpful to have more than one to help cover any rental shortfalls or vacant periods. I’d be inclined to let DC borrow for uni tuition fees but try to minimise the need for them to borrow beyond that. In our case our uni DC is living at home so we’ve been able to give them a monthly allowance which is good money for them but a lot less than the school fees were paying previously so we’re all happy!

Good luck - it’s quite a bittersweet issue to have.

I'm so sorry about your mum.

I do wonder why someone who's so savvy with money as to be in the position you are would be on mumsnet asking for advice on what to do with a sum that most of us couldn't dream of having spare. You could apply the same sensible judgement that you've used to build up your savings, pensions, paid off mortgage and bought a buy to let.

So sorry about your Mum. I'd pay and get proper advice and I'd probably not do anything with the money for a little while.

My guess would be £60k - £70k for each of the kids for house deposits and keep £40k- £60 for you and your husband.

Tell the kids they can have say, £1k or so on a holiday or a splurge if you think that would be a good thing for them.

Maybe you could have £5k-£10k for a holiday or splurge

I expect to have a similar sum in several yrs when a family property is sold by the ILS. My plan is to buy a second home on the coast of Spain or Italy and forever keep it in the family for DCs to holiday, and future grandchildren.

Personally I'd pay off the BTL mortgage and put the remainder in your savings - have you filled your isa's for this year?
If you want to gift some money to DC, put it in LISA 4k each

I seethe when I read of people having BTL properties as investments. You're stopping someone from getting on the housing ladder.

See I don't understand this - plenty of people don't want to buy a house - they want to rent. I'm not aware that there are shortages of properties for sale?

OP a second BTL could be used to fund your kids through uni, then you could sell it in a few years if you wanted to give your kids a deposit, or keep it to prop up your pensions.

I'm not aware that there are shortages of properties for sale?

Of course there are! That's why prices are so high - demand massively outstrips supply.

Very similar set up to yourself following the death of my DM, although I was 44. No mortgage. DH is a high earner. GP already paying uni fees .
We now have an IFA, max out our ISA's and invest the rest including pensions so can both retire at 55 and travel. Will dish out to the DC for house deposits as we see fit when the need arises.

I'm not sure it's as simple as that tbh with the property market. By the same token you're arguing there's too many BTL properties - which according to you should mean rental prices are low. Except they're not. Sometimes demand/supply graphs don't work the way you'd expect!

Undergrad degrees are well funded - Postgrad education is less so. Maybe offer to fund a Masters/PHD, or give a deposit for a first flat.

I’m sure your mother would be so happy to know she had helped her Grandchildren, why not give your children a choice how they wish to be helped.

Since change in tax laws, there is a shortage of rental properties actually. Landlords are selling up as not a great tax advantage anymore. Letting agent told us she could have done more than 30 viewings for our BTL recently as so few properties to rent on the market. The market needs private rentals as well as properties to buy.

Do you have to "do" something with it?
Why not put it in the bank for now?

Really sorry for your loss OP.
been in a very similar position myself.
personally I would say:
10% ‘fun’ money
10% to help the kids
which leaves about 144k to buy a couple of buy-to-lets on interest only mortgages (assuming values of around £300k each and 20% deposits) that will give you immediate income. You could use the income short term to help the kids through uni even more and longer term to bolster your pension.

Because inflation is over 10% at the moment, interest rates on savings negligible, which means the real value of a heck of a lot of money will be eroded very very quickly if OP doesn't make decisions fairly quickly.

I've been doing money wrong :(

To be fair it's only the last year that inflation has been so high, but yes it should make people think about where to put their spare cash.

By the same token you're arguing there's too many BTL properties - which according to you should mean rental prices are low

What are you going on about? Rents are high because there's a shortage of properties. Many people can't afford to buy because they can't save a large enough deposit because they're paying huge rents to BTL landlords.

Utter Bollox

Don't pay off Uni as they go. The biggest favour you can do for your children will be a deposit for a property in due course. What % profit would you say you are making on your buy to let? You might be better with the money invested for now but bear in mind the actual investment costs of approx 0.75 - 1% for a managed
fund.

Give something to a charity that would please your Mum and make you feel
good too. Maybe plant a tree or something that reminds you of her.