How to use inheritance - any smart ideas please?

[confusedremoney]

Hello - I’m soon to receive a small inheritance and wondering about the best way to use it, if anyone feels like making informed suggestions!

It will be approx £150k. I’m 51. I’m married (5 years) but not 100% convinced it will last, or even if I want it to - it’s really not great and we live fairly separate lives at the moment. This may be my chance at freedom with some financial security. I have one DS from a previous relationship, now aged 14. I’ve worked in low-paid jobs for years, currently earning £26.5k pa. I have a feeble pension pot of around £20k. Have saved approx £20k for DS over the years. Jointly own a home w DH, outstanding mortgage £180k, probably worth around £320k. DH parents will very likely leave him something too. He earns more than double what I do, so is pretty financially secure. We live in Scotland.

I’d like to put something aside for my pension, and something aside to help DS in future, either towards uni or getting on property ladder. Hopefully he'll go to a Scottish uni and fees will still be free (fingers firmly crossed!). But also thinking that if I get divorced in the next few years, maybe once DS in uni, I’ll need to buy a different home. Might I be better using my share of the equity plus the inheritance to buy one outright on divorce, and then I can then save a larger monthly amount into my pension until I retire, as I won’t have a mortgage payment every month? I’d also considered buying a small flat now as an investment but in Scotland, I believe that inheritance is not included in any divorce proceedings but any asset you purchase with it would be. So am I better to invest the money somewhere useful in the short term instead, while I work out my future plans? And if so, where to invest? I’ll never have money like this again so I can’t afford to lose it.

Sorry, lots of questions but no real answers yet. Also not sure if it’s feasible to get a financial advisor for this relatively small sum - I think they are usually for bigger amounts? Hmmm. I know this is a good problem to have and I’m lucky but lots of elements to consider. Thanks for reading and for any thoughts.

£150k is not a small inheritance!

It’s not a small sum. Go to an IFA. They know what questions to ask you and can advise as the best course of action given the various scenarios you’ve outlined. You may also want to seek legal advise if looking to divorce.

I would pay off any debts.
I would max out S&S ISA allowance this tax year and next tax year.
I would add as much as possible to Pension this tax year, which might be £15-20k depending on what is already going in.
I would put 9k in a Junior ISA for your DS.
I would probably then just sit on the rest, could put up to £50k in NS&I Premium Bonds, and rest could go in as high an interest savings account as you can find (without locking it up).

This may be what rocks your marital situation, thus why I am saying keep a lot of it accessible. Park the money and really think about what you want for your, and DS, future. You may decide to move on from the marriage, buy your own home, so would use the money within a few years for property.

You need to talk to a solicitor asap, it’s worth the cost of an hour or two. What you need to understand is what happens to the inheritance if you divorce in 5 - 10 years time vs filing for separation (before you actually get the inheritance) and divorcing now.

Using equity + inheritance to buy property outright and save as much as you can into pension/ savings is approach I would take.

When you see the solicitor ask if you set up a business (Ltd company) and buy a property as a buy to let business how would that be impacted by divorce.

Primary concern is ringfencing it in the event of divorce, tbh.

Get proper advice!

You may want to contact a Financial Coach, to teach you about what options are available but not sell you any particular product.

BoringMoney lists one Fixed-Fee Financial Coach in Scotland, though you could have a coach based anywhere. www.boringmoney.co.uk/advisers/

If you decide to go for Financial Advice, then have a listen to this podcast to help with finding an adviser: meaningfulmoney.tv/2021/05/04/the-financial-advice-checklist/

I would go out and buy a gorgeous leather jacket in a bright colour, a pair of shoes and bag I've always wanted, then wear them all to go to my favourite cafe, order whatever I wanted and then sit and ponder all these posts!
I feel sad to read the 'possible divorce'comment 😔

I’d see a solicitor first and foremost. That will dictate the direction of your planning. Are you sure your marriage is over? Is there anything that can be done to sort that out.

Thanks everyone - some interesting and useful suggestions here. I'll seek out some professional advice. Cheers for the link to the boringmoney site and the idea of a finance coach, there are a couple near-ish so may investigate that too.

The marriage limps on and we are mostly kind and courteous to one another but there's no real intimacy, sadly. I read other posts here asking for advice on inheritances in a happy marriage and I so wish I was asking the same, I wish this was about paying off a chunk of the mortgage and doing something wonderful together in our retirement years. But I think probably not.

Could you invest in some marriage counseling? Psychosexual counselor?