What to Do with £250k

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Due to very unexpected demise of a parent we will be inheriting approx £250k.

we are both just turning 50. Mortgage paid off. Twins. One off to uni next year. The other with difficulties which means she is unlikely to live independently.

I have reasonable db pension My husbands is also de fined benefit but less as he took several years out to deal with daughter.

how should we invest? Will see an IFa but don’t want to go in blind. We currently had built up about £50k in savings but both our jobs are looking like they are on the way out and we are in fields where it will be difficult to get comparable jobs again.

DH has the idea we should sell our London house (£700k) and buy something with a business for our daughter.

any thoughts welcome

what type of business?
where would the accommodation and business be located?
do you have experience in said business?

I would love to find an IFA (not because I have an investment as big as yours but to get advice). When I search for IFA's locally and contact them, Ive never had any come back. Its like people dont want the business, I cant understand it

Thanks for your replies

I crunch figures before I do anything. but my husband is very impractical I fear. We don’t have any business experience. Between us we are are a uni lecturer and a statistician

@ivykaty44 he suggested a b and b - I couldn’t think of anything worse. At the moment we both have very flexible jobs but I am acutely aware any sort of service related business would be a lot more time consuming.

I guess the ideal would be some niche online selling. We could live in a cheaper part of the country to realise equity and maybe train our daughter up in the business. But what business I have no idea. !

What sort of difficulties does your daughter have op? If she's unlikely to live independently can you invest some of the money so she will have something to live on in sheltered accomodation when you're no longer able to care for her?

I think she would be my priority as it sounds like your son should be able to support himself

See a financial advisor.

The business sounds like a terrible idea (sorry) but neither of you have any experience from what you’ve said. Too much risk!

I would drip feed the money into an index fund in an ISA for you and your husband. The money can then grow tax free and you will be able to help your daughter as needed.

Do not give up the security of employment for a business. You will potentially burn through cash you have saved and inherited.

The most logical thing to do are

1. Increase pension contributions
2. Save some money in ISA

Maybe keep your house and get a let to buy mortgage for 40-50% of the value. Let it out and put the 40-50% borrowed into a new home somewhere else - where you can both still work. This will give you something you can give to your daughter in future and allow you to move out of London. Perhaps combine 50% from the let to buy with some of the inheritance and you could find a new house with a big garden you can do an Airbnb? Get a mobile home and a hot tub in the right place and they let quite well - but much lower risk than a B&B, still some extra income and you can be flexible about what you do.

My business idea is selling magic the gathering products on eBay with that size of capital, not sure if the business would do well but if I balance the books it should last for a few years as long as budgets were controlled and spending on products ect.

That aside if it's stocks ect is invest in different types so it's not an all in the same investment

Don't give the money for your daughter if her difficulties are significant.
If she has savings she will have to fund her care home, sheltered accommodation etc. Also often her day placements. If not, the state will pay. I have seen this often with my learning disabled patients. They inherit the house. Social services require it to be sold to pay for care. Within a few years all the money is gone.
Leave it to the more able twin. I know it sounds counterintuitive but leaving it to fund care does not achieve better care, it just plugs a hole in the social services budget.

This is just my personal opinion:

• I would pay off any debts you or your children may have (university fees etc).
• I wouldn't really sell my house if it is for buying a new business venture. Instead, I would either rent it out or sell it to buy a new property to flip (create a portfolio).
• Depending on the situation, I would register as a company for my estates and buy more properties under the company name for tax relief etc.
• start to learn about stocks and invest but do so with care. Invest only what you can afford to lose.
• I'm not sure what business you have in mind but alot of business ideas isn't always guaranteed. However, i do think that estates are safe bets if you know what you're doing and people will always need a home to stay so I would likely use the 250k extra to buy a cheap house possibly from auctions and renovate it to flip or rent (long term or bnb).

Just to summarise, by the sound of it, focusing on estates would be the best choice for you and especially your daughter as you can easily get help from property managers to manage the properties on your/her behalf. Once you are gone, she will be able to receive rental income with minimal effort especially once the mortgages are all paid for since this will be all pure profit. She can then just use this to hire someone to assist or care for her privately.

Would the business be something your daughter be able to run? Or are you suggesting buying a business so your daughter can take a passive income from it? I think ths second idea is a bad one.

I would put 20K each into an ISA that tracks a FTSE fund before 6th April. I would then do the same for the next tax year. 80k.

Not sure after that!

Good point about social services taking inheritance, however what about a disabled persons trust?

advisingfamilies.org/uk/information-portal/managing-money/how-can-i-make-sure-my-disabled-child-is-provided-for-when-i-die/

i think some of them will ring-fence the money, allowing the disabled person to still claim benefits etc, but they can access it for things they want/need, with a family member as trustee.

Have you considered investing the money into property? Up country you could a couple of properties to rent out and as they are mortgage free subject to letting agent fees and other costs you could build your pot up further - and then when you come to retire you can sell the properties which could see you significantly increase your investment or you can keep them and then your DC inherits them when you pass away.

I definitely wouldn’t buy a business without experience and I certainly wouldn’t buy a B&B - too much cost, not as much profit as you’d think there would be. Also, if the COVID pandemic was anything to go by, this wiped out many small businesses with hospitality affected the most - I’ve known many hoteliers go bankrupt even after pouring life savings into the business.

max out your ISA allowances every year and put the ISA pots into a tracker fund which follows the stock market. Nutmeg is not bad.

look for an IFA but be aware that some can't be bothered with less than £500K

think carefully about the long term plan for your daughter. what does she need to live semi-independently? would a trust be valuable?

don't forget your son - if you can gift him a house deposit at a relatively early stage, you could set him up for life.

be very cautious of setting up a business or a buy-to-let etc. They can be a lot of work for not much return and there can be big unexpected bills involved. If your DD can't live independently, she probably can't manage a buy-to-let either.

Thanks everyone for your advice. You’ve confirmed what I thought. We’d be mad to try and find a business when we’ve got no experience.

I wlll read properly through all the investment advice but I suspect probate etc would mean that we wouldn’t get the money till near the end of the year.
it’s sobering that £250k is too small for an IFA to be interested in.
my DD has autism and learning difficulties. She’s not at all independent at the moment. But I don’t think that she would meet the criteria for supported living. She was also left £35k as was my DS and he had already saved money for uni so with what we give him to live on I think he will keep £35k for house deposit which we would try and supplement at the time.

I guess if we lost our jobs then that would be the time to think about downsizing and maybe buying somewhere cheaper with a flat for DD. My DS has always understood that we would try to bd fair to both children but that could mean an uneven split of inheritance. However he has aims to study at Oxbridge so it is likely that he will be in a much more solid place financially anyway.

thanks for everyone’s time and advice. It’s just so important for me to get my DD as secure as possible so that she’s not my DS responsibility after our days.

When I inherited a similar amount last year I decided, after a lot of deliberation, to use some of it to pay for my children's university fees and maintenance up front rather than them getting a loan. It's a very personal decision, but in our case it works because our sons are likely to be relatively high earners. Also, as our estate is likely to be subject to inheritence tax in future it's better for us to transfer assets sooner rather than later. We will also be paying off what is left of our morthage and setting our sons up with big deposits for future house purchases.

I read this FT article (behind a paywall, sorry) after I made the decision re the uni fees and was pleased to see it corroborated my decision. So much of the narrative about this is driven by MoneySavingsExpert who aims his advice at people in majority demographics and doesn't cover every angle that might be relevant.

FT 20/9/22: Should you pay your child’s university fees up front? on.ft.com/3ShSQ8X