Inheriting large sum of money. WWYD?

[Rainallnight]

My parents have both died and it has come to light that they had more money than we had ever thought.

The estimate is that I’ll inherit around £850,000. I recognise I’m extremely lucky and will of course give some to charity and to friends.

Our mortgage is massive (London) - around £400,000.

Should we pay it all off? And then what? Am clueless.

Want a change from my job, not a chance

And on the education question, the will includes money for the DCs’ university education so that’s taken care of separately.

So sorry for your loss op

Personally I'd pay off the mortgage and any other debt, then put an amount into premium bonds each for the children (the max £50k), premium bonds for myself, Isas, additional.money into trusts for the children to protect it, and then some for bank account and some for a treat. Of course professional finance advice first though! Having also seen the fall out from divorce I would be practical (read that as "callous") about making sure I protect that money from divorce pay outs so the children would be guaranteed their money.

From a financially based background I would be tempted just to reduce my mortgage ad then invest in another property with food rental potential. The money you make will pay for the second and give you a long term asset and you will be better off by having a lower mortgage to pay on your home . You can easily fritter money in the bank away. I'd be tempted to set up a trust for my children potentially too.
Uou have 2 years from the date if the deaths to make a variation on the will yo ensure your children receive a decent share (if they havent been accounted for or to give more than they were left to reduce your own inheritance tax bill). You have an inheritance tax bill to pay anyway.
Mortgage rates ate currently very low.
You are more likely to be able to purchase a second property more cheaply in the current circumstances and any income return on this as a rental property will be far higher than the savings you make on mortgage repayments in the long term.
You most definitely need professional advice on this

@Bristolbitsandbobs
Interested to know why you don’t recommend SJP as a wealth management company?
My parents are with them and I think their advisor has been taking a lend of them for years

Figgy We are with SJP and we are very happy. I think with all these things you have to know what you do/don't want to do and not be led down paths you don't want to go.
My DPs have the same advisor and as they are now elderly my DB and I are copied in on any advice before they proceed.
We trust our advisor, he understands what we want. I know they are not 'whole of market' but they do considerably better with our money than we would do ourselves, even after fees.

I would never go with any company if I didn't like the advisor, and I would never do an investment I didn't understand.

Has the estate gone through probate, and is the estimate of £850k taking into account any inheritance task due?
if not, don't plan to spend it until it is properly confirmed, as inheritance tax bills can sometimes be surprisingly large!

Enjoy your inheritance though.

Bugger. I just wrote a very long and detailed reply to @Figgygal and I've just lost it. .. so annoying.

I will try later.. when I've done some actual work - sorry

I'm so sorry for you loss.

If it was me.....

1. is there something you would love? Big family holiday / new car etc? Treat yourself.
2. pay off mortgage / loans etc
3. if you / DH have unused pension allowances I would max this out, you can go back 3 years and top up up to £40k per annum - you can do this yourselves via your pension administrators so you don't need to pay fees
4. max out isas (are you under 40? Look at LISA's)
5. pay the money you're saving on your mortgage into a separate account along with anything left over and enjoy it / top up ISA's

So sorry about your mum & dad

However, I would think very very VERY carefully about giving cash to friends 'just because'. Almost inevitable that it will cause bad feeling with someone. Take them out for a wonderful slap-up meal or a weekend away if you really feel you want to, but don't go handing out money.

Pay off all your debts including mortgage.
Small trust fund for the kids.
Pensions.
ISAs.
Stocks.
Fabulous holidays.

you can go back 3 years and top up up to £40k per annum

NO YOU CAN’T!

Not unless you earn £40k (or more). You can’t just dump £40k in a pension unless you earn that each year. If you do you can also pay more using Carry Forward

Not wanting to be cynical but was your engagement since your inheritance came into view?

I’d spend money on a lawyer and a prenup if possible as you could easily lose half of it in 2 years.

Do a will and make sure your children get your inheritance not dp/ his potential future wife/ her dcs if you die before him.

Sorry forgot to add as long as your earned income is over £40k.

Definitely pay your mortgage off .........I wouldn't give any of it away either. If you want to make provision for certain charities then do that in your own will.

Pay off the mortgage!!
Wait and see what will happen in the property market, I’m sure it will drop this year, then buy an investment property.
Do some traveling next year.

Really sorry for your loss OP, how sad that your parents died relatively young.

I would sit tight on any big decisions, including giving to friends. If you haven't already done so, I wouldn't tell them the amount either.

If it were me, I'd pay off the mortgage, make sure I had wills etc, and yes, consider protecting the money long term. Beyond that, if there is a charity or cause your parents would have loved, you could give some to them. It seems like this could be a good time to consider the change you say you'd like, so it might be that you look at retraining or just doing something different, and being mortgage free might well allow this.

I think there are two different ways to look at it - financial investment or lifestyle investment. I understand what was said by another poster about the money representing the sum total being passed down by family and not wanting to waste it, but it's for you to understand what wasting it might look like to you.

In terms of your friends, when it's possible again I would maybe take them away for a weekend.

It would help to know how much equity you have in your current property. Do you have kids?

In your position I would probably move to a modest property in the country, then purchase a couple of properties to let as HMOs in a nearby city (much better yield than standard rentals) or a couple of small properties in the countryside for holiday letting.

I would also find a part time job that isnt particulary taxing on the brain.

I agree with not giving anything to friends. Whatever you give you'll offend somebody. It's a large sum and enough to move to a bigger better house. That's what I'd probably do. But you might be perfectly happy with the house you have now. But don't do anything till you've mulled it over for a good few months.

You need to speak to an IFA. They can advise about tax efficient investments etc.

I’d pause before ring-fencing your DP out of this money. Is his generous pension worth about the same as your inheritance? If it’s final salary you’d be surprised how high the cash value of it is. If so, I would limit my pre-nup to an agreement that both assets are to be shared equally in the event of divorce.