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.

The problem with saving for kids in your name is that
a) e.g. you will be limited by your own tax-free ISA amount (£20k per year)
b) any taxable interest from other savings accounts will be taxed at YOUR marginal rate

Only you know what your kids are like, but both mine had junior ISAs and knew that the money was designated for e.g. uni/ car/ house deposit etc.
Neither went on a spending spree. In reality ISAs can be a bit complicated to withdraw from for your average 18 year old anyway.

Have you considered junior isa for the kids. You can put in 9k a year. So maybe 9k each. They can't touch it till 18. It's a good start if they want to go to uni or buy a house.

£100k is a lot to you but in terms of investment it is not very much, so a financial advisor would either be very expensive or they would only give you very basic advice - stuff you can find out yourself online or by reading a few books. MSE is a good place to start.

First and foremost think of funding your pension, reducing your mortgage and investing in S&S ISAs. Something simple like Vanguard trackers (UK, US, Europe) as their charges are very low. (Hint: always consider fees and charges when investing.)

By the time you've done all that you'll hopefully have enough left for a rainy day fund, i.e. a bit of security in case the boiler breaks or you need a new roof.

@PhysioLim I'm in a very similar position to you - right down to the public service job situation.

I inherited a similar amount of money a few years ago. It was actually given to me already invested in a bond. Essentially, it is locked away. I can withdraw 5% of the original capital every year (£5k) tax free. If I don't withdraw it, it rolls over to the next year. So, if I didn't withdraw anything for 4 years, I would be able to withdraw the whole £20k.

The fund is a low risk product and is growing at around 6%.

If we had just thrown it at the mortgage, saving the money we would have spent on mortgage payments would have taken a long time to add up to a decent lump sum. We are lucky in that we have a small mortgage, so that does effect my thinking.

I like the security of having a large lump sum. I use some of the tax free money, sometimes, but otherwise it is there as a safety net, ready to support early retirement should I need it. We've saved for our children since they were born and both will have a lump sum towards a house deposit, but that is separate to this money.

Thought it might be useful for you. Good luck with whatever you decide.

I would 1. Pay off any debts

1. Start paying down the mortgage.

When your fix runs out, the mortgage rate will be a lot higher, the more you can get your loan down before then the better.

I’d pay it off the mortgage. Your house over the long term will only ever go up so the money you pay down is an investment. It will also help reduce your monthly payment so that you have extra money left over to pay off debts.

For that amount I wouldn't pay for advice. £100k really doesn't go very far sadly! Do some research yourself to see what works for you and in the meantime pop it in premium bonds (max £50k per person).

i don't think you need to pay for advice:
pay off credit cards
a portion away in savings
a portion towards pensions
a portion towards the mortgage
a portion towards each child
a portion towards a special something to remember the person (not necessarily expensive but something that leaves you thinking of them when you look/use it).

Op as above I would pay so emtion of mortgage or put money into high earning saving off the amount you wanting to pay say 40 grand info saving account ( what ever it will let you pay in or then pb) and then pay chunk in according to your mortgage rules.

Ie making money on it to pay more off. People alsp seem to get better pb returns on that amount.

Re pension, you can have your own sipp, self invested pension and put money into that as well.

Do you have an isa, cash and stocks and shares?
If not I would open those also, 5 grand in each?

For the dc I would opened them up a sipp.
You can open with 100 each I think.
Invest in index funds.

The b a they're grow and start work or inherit themselves they can add a littlest more and by the Rome they comes too 58, or whatever lower age is they cab access that sipp.

Also for the them I would do several places to save, small amount in cash isa, stocks isa snd save if you want in your own name.

But having a ew pots for them maybe a grand in each wool really help them get into thats saving and investigated mindset.

@Nix32 that sounds interesting, which company and can you say more about rhus product pleaae.

Lots of good advice here. I'm another who would not recommend an IFA (at least until you've done some thinking yourself about mortgages, pensions, debts etc). I don't think anyone has mentioned podcasts yet - there is a good one by Pete Mathews called Meaningful Money that I found very helpful.

I inherited a similar sum when my dear dad died a few years back. Luckily I had no major debts beyond the mortgage; I let my current term run and then paid off the balance (was nearly there), then saved what I was paying into the mortgage into a S&S ISA; got premium bonds; paid more into my pension; treated us to a couple of extravagant (to us) home purchases.

Overpay mortgage as much as is allowed.
Max out cash ISA, £20k now £20k April 6th : currently @ 5.5-6%.
Fixed term savings or bond ladder, maturing every 6/12 months, again 5.5-6%.
Put a chunk in your pension / open a Sipp say £20k if your earnings allow it then drip feed into a Global tracker ( lump sums straight in can be scary, especially when they drop 20% a week after purchase 🙄 - bitter experience).

We inherited a similar amount in 2021, we didn’t pay off our mortgage because it was only £30k and fixed at 1.1% for 5 years, we will pay it off when the fix ends in 2026 and we will owe £15k, a no brainer because we are getting 5.5% on that cash in a fixed rate account.