Inheritance-where to get advice I can trust?

[PhysioLim]

I am due to receive an inheritance soon, this is the first for my family as previous generations rented. I have no experience with money except as a student when I had 10K from a sales job, that I didn’t handle well and spent it all by halfway through my degree. So, I want to handle this properly. It’s just over £100k. We have a big mortgage as bought first house late in life. I have two children 12 and 8.

Where do I start? I’m sure i’ll need a financial advisor but where can I find one I can trust? I’m frightened of being scammed when transferring large sums of money, or looking back at this point and regretting that I didn’t do more with the money, or feeling like I wasted it somehow. I would like to secure money for the children’s future.

The one person that id usually go to for advice is the one person I can’t reach.. as his passing is the reason the money is coming and I desperately want to honour his memory and feel my choices would make him proud by not losing or wasting this opportunity to secure our future, as it’s more money than I have ever known.

If you have a big mortgage, I'd suggest the money would be best used to paying some of it down.

I agree. First thing to do would be to pay off the mortgage, especially if in the past you've ended up frittering savings away. Out of sight, out of mind! You know that way it has gone to a long term investment that will help in the long run. I might be tempted as well to put some money aside into a long term savings account (eg a 5 year fixed where you cant access the money til the end of the term) for each of your children so it can be used for university for example.

What’s your mortgage rate?

You need to find an independent financial advisor in your local area as a first port of call.

Usually advice is to pay off your debts first, but when it comes to mortgages it can be a bit different - eg if you can earn a higher interest rate by putting it away in savings (less tax) then you are better off putting it somewhere to earn that interest until your lower rate mortgage deal comes to an end. You can get around 6% in some places if you are prepared to lock the money away for a year so if your mortgage rate is under 5% I’d favour saving over paying down your mortgage right now. Also don’t forget that many mortgage companies only allow you to overpay by a certain amount each year (usually 10% of the outstanding balance, though some like NatWest allow up to 20%) so you’d need to find out what your current deal says.

i think you need to think about the following:
mortgage - what’s left to pay, current rate and when does that end?
current pension provision
what savings do you have?
any debts?
Then start doing your own research. Money saving expert has some good information.

Personally I would say you don't need a financial adviser for this amount of money. I once went to one and came away thinking I could have done that myself.

You could get some more opinions on Moneysavingexpert?

My choice would be to use the whole lot to pay down your mortgage. Before you do that, talk to your mortgage provider about whether there is any penalty for doing this (there probably won't be but I would check).

Then you should have a big reduction in your monthly mortgage payment. Check your pension provision - use some of it to start paying in if you haven't.

Then I would set up savings accounts straight away, using the money that has been freed up by that reduction, and aim to build up four kinds of fund over the next few years.

One immediate access account to cover unexpected bills and ideally house maintenance.

Maybe a separate fund for holidays.

One longer term account with a decent interest amount that is locked away for a year or more - very easy on National Savings and Investments.

One each for your children - see what is supposed to be a good buy on Moneysupermarket.

Go to a big company like St James or ask your bank for advice.

Please don't go to St.James - they will just relieve you of a large sum for virtually nothing!

I second going to MoneySavingExpert Forums and posting there for advice.

£100k is a lovely sum to inherit, but you really don't need financial advice at this level - you've already had good advice from @ShanghaiDiva , i.e. look at:

• debts
• mortgage
• pensions
• savings (not more than £85k with a single bank/institution)
• put some in Junior ISAs for your children

I would also say, don't feel pressured to rush into any decisions. If necessary put it into a couple of savings accounts paying 5-6% and take time to make a plan. Do your research, have a think about what's important to you and what would make a difference. Chat to people in forums to get opinions and advice.
Good luck.

I would take a chunk off the mortgage of it were me. Then you have a lump of equity in case of financial shock.

Take advice.
unbiased.co.uk

But don’t necessarily pay down your mortgage - yet. If your mortgage rate is - eg 3% - you can get 5.5% in low risk cash account. No point in paying down the mortgage until you come to review. you’ll make more on it in cash at the moment than you pay in interest.

then you have the lump sum when you come to remortgage. Only £85k in every account is covered by the compensation scheme so bung it in two different banks.

or you can invest and aim for higher returns - depends entirely on your risk appetite.

There is a flow chart somewhere that tells you what to do with your money.
I will see if I can find it on line.
but it says first of all pay off all non mortgage debt.
then have 3 to 6 months of living expenses in a easy access account this could be Premium Bonds
then consider your five year plan and save money to make that happen.
also look if you need to top up your pension

you need to learn about cash ISAs and investments ISAs and your attitude to risk
it is recommended not to put money in your kids name as it is legally theirs on their 18 birthday and they can spend it there and then on what they want, so think about how to save this for them, but not in their control

paying off the mortgage brings many people such peace of mind, as no one can take your home off you, so think about doing this too. You can then save what you would have paid to the mortgage for whatever is in your Plan

i have also seen a recommendation not to make any big money decisions in the first year, especially if the inheritance comes from someone very dear to you, so bung 50k in premium bonds, 20k in a good cash ISA fixed for a year, and the rest in a normal savings account and come back to it in a year. You will have earned some interest and can then plan ahead properly.
don’t forget to allocate some for fun, and some for a lovely keepsake to remember your benefactor by.

The thing is OP, a financial advisor could end up costing quite a bit for fairly basic advice, so you would want a recommendation.
Do not go to St. James - they have a terrible reputation, look up some reviews of them online.

The basic advice would be pay down debts, pay some off your mortgage, and put some into pensions. Keep some aside for a nice family holiday, or to buy something to remember your loved one (a piece of art or something).

What would you like to do with this money? As in is there something you would love to do like move house, get a loft extension etc?

How is your pension? Putting money into your pension immediately attracts the gvt tax rebate…and then you can take out a lump sum tax free 10 years before your state retirement date. (But many pensions are not performing well atm)

Do you want to save it to start your Dc off with a deposit?

On £100k you can make £5k a year interest atm, in a fixed savings account, MSE gives good lists. However £4k of that will be taxed.

You can put £20k a year into a cash ISA and interest is not taxed.

If you do want to pay off your mortgage, be disciplined when you come to the end of your term: SAVE / invest the money you are no longer having to pay on your mortgage. Don’t just fritter it away as extra disposable. You might as well fritter the inheritance if you are not disciplined with the mortgage saving.

An IFA doesn’t necessarily have to cost a lot. I pay mine £500 per year to manage my pension and 2 investments. Yes there are one-off set up fees for things like investments, but most fees can take those off the investment products rather than as a separate payment.

Don’t forget as a basic rate tax payer you pay tax on any interest earned over £1000

I am not an expert but something you might want advice about is whether you should consider protecting your inheritance in the event of divorce.
If I understand correctly once it's used as joint money such as paying off the mortgage it becomes a shared asset but if you kept it in your name it would be kept out of any division of assets.

Personally I would get an IFA to stop myself spending the money and knowing where best to place it.

DH and I are both intelligent people with pretty good jobs - but we're useless with money. We use https://www.digby-associates.co.uk/ for our mortgage and we're now using them for financial advice.

We're not in anyway local to where they are - the recommendation previously came from my cousin. We're just really impressed with their services and now recommend our mortgage broker to everyone. The mortgage broker and IFA work together and we do trust them.

ukpersonal.finance/lump-sum/

Have a read of this to start with. It links to a flowchart (possible the one PP mentioned) and has links to stuff about repaying mortgages etc.

I'd off your debts. I pay off a lump from your mortgage. I'd keep £20k in case of an emergency. I'd do ISAs for the kids.

I think this is only true if both parties' needs can be met from non-inheritance assets. If they can't, then an inheritance will form part of the pot to be shared.

Lots of good advice here. Remember that you are not the same person you were as a student - you have a mortgage, you have kids, you have (I assume) a job and you want to save for the future. Most of us wouldn't be sensible with £10k as a student so don't beat yourself up for that any more. Well done that you want to be sensible now.

You probably don't need an independent financial advisor for this amount. Definitely read the Mumsnet money pages and MoneySavingExpert's website - lots of great advice.

Useful things to think about:

(i) debts - you don't mention any but, if you have some, I would recommend paying them off, starting with the ones that are most expensive to service (highest interest rate)
(ii) mortgage - what interest rate are you paying? It may be worth reducing your mortgage or, if you are currently on a good deal, put it in ready access savings to reduce your mortgage when you need to re-mortgage
(iii) pension. You don't mention this - it is often worth putting extra money into a pension, you don't pay tax on it so investments are almost guaranteed to do well because they are boosted by your tax amount right from the start. You also get to avoid poverty in old age
(iv) easily accessible savings. Shit happens. It does. The car breaks down, the washing machine dies, the kids need new shoes - generally all at the same time. Make sure you have the equivalent of two or three months' salary in high interest easy access accounts or Premium Bonds. You will need it
(v) investments. NOW you can start thinking about investments. Spreading the risk through unit trusts, getting tax free interest through ISAs are useful ways of dabbling in the stock market. Regular saving rather than one-off investing means that you benefit from pound cost averaging (buying more when they are cheap and less when they are expensive) but there are also plenty of other ways of investing and sensible online reading will help with this. If you opt for unit trusts or stocks and shares ISAs look for low fees. High fees really eat into your returns and, with trackers, there really is very little for the investment firms to do
(vi) the kids. Now you can think of the kids. It really doesn't benefit the family if the kids are swimming in savings while you lose the house or lie awake worrying about the electricity bill. They will benefit from inheriting from you (hopefully). Yes, open up savings accounts for them. Some people do this in the children's names, others leave them in their own names until the children are ready to guard against craziness at 18. Entirely up to you
(vii) treats and spends. These are legitimate too. Life isn't just about saving. You can set aside some of the money for treats, necessary expenditure and simply remembering them. £5k could get you a lovely family holiday or two, or perhaps some theatre trips or something else. Another £5k could go to doing necessary things around the house

Hope this helps and so sorry for your loss. It sounds as though you lost a lovely person and a great advisor

See an independant financial adviser if you want (stress independant). First though do some reading yourself and educate yourself about money. MoneySaving Expert is a good place to start. You will find advice on there about whether to pay off mortgage and when it's better to wait.
Learn about tax on savings; stocks and shares; cash ISAs and S&S ISAs. Read up on SIPPs.
If you still feel you want advice after that at least you will have some idea of whether you agree with any suggested investments.

Also I see someone recommended SJP, read the thread on St James's Place first.

Wow this is such great advice, thank you all for writing such great details answers. I’m working through each of them. I will certainly go through the mse website and review the flow chart mentioned a few times really closely.
The mortgage is on a 5 year fixed back in 2021 so is on a good low rate, so we’re luckily ok there for time being. No debts. We’re both public service workers so pensions are ok but topping up could be beneficial. I like the idea of paying down the mortgage with a chunk (what ever is permitted per year) then being strict about saving the difference in payment to build up funds. Having a 2-3 month safety net makes sense. Savings for kids locked away, in my name I think. Also like the idea of just freezing it for a year to give me time to stop and really learn about everything before doing anything!

Lots to think about, thank you, feeling calmer now I have these ideas.

If you pay it towards the mortgage and you own the property as joint tenants you might want to get your solicitor to split the tenancy so you hold as tenants in common with agreed percentages to reflect your greater contribution. Just a thought anyway. I didn't do this and I'm regretting it now we're divorcing.