Inheritance question- what to do with it??

[sundaysundaysleep]

Apologies if this comes across as insensitive to anyone with money worries but I can't speak about this to anyone in real life (other than DH) and thought this was the best section to ask this question.

I am due to inherit around £250k after my remaining parent died this year. It was a horrible ending and I am grateful that this money has been saved and passed on despite the awful circumstances to receive it. I therefore want to consider how to use it in the persons memory but also use it to live life and connect with adventure, experiences, life and living!

Our mortgage is already paid off and I don't have any debts (like credit card or car etc). A chunk will go to our teen kids for when they are older, and I will probably put some in my pension but what else will I do? We are def going to go on an amazing holiday at least.

WWYD? Invest? Splurge spend and enjoy? Move house? Buy a buy to let / holiday home?

Any ideas welcomed! Thank you

As you have AC and have paid off your mortgage, I’ll guess your stage in working life.
The best thing I did was
retire early

The value of the property might well increase over time, yes. But in the meantime you will have to

1. pay for the numerous certificates etc to make sure it is safe and legal to rent out
2. If you are going to have a tenancy fully managed deduct 10-15% of income for fees
3. If self managed the cost of your own time
4. landlord insurance
5. cover the costs of any empty periods between tenants
6. possibly cover periods where your tenants stop paying rent
7. the costs of eviction
8. maintenance costs - your tenants will be far less tolerant of minor maintenance issues than you might be in your own home
9. Increased income tax liability
10. CGT when you sell it

All of these chip away at your income - my current rate of return is barely 5% on unmortgaged properties- remember the costs of mortgages cannot now be deducted from income for tax purposes. You will have read about landlords fleeing the market. This is why. At the very least make sure you have a slush fund of at least 6 months anticipated rental income before you go to market.

@ElizaMulvil

Assuming you are in the U.K., they get loans covering the tuition in full then a means tested maintenance loan. If you have a family income over £60k you will be expected to contribute £5k per year per child basically. So I would suggest setting aside £50k for higher education (£25k each) and if one decides not to go, gift it to them at 25 after which your income isn't a deciding factor for university loans!

Please do not consider a BTL, there is no real profit and huge risk, l have been offloading my small portfolio for 4 years, after being in this line of work for 25 years, so l do know what I am talking about.

Isa's, and pensions should be maxed out first to avoid tax on interest accrued, beyond that it depends on your circumstances and comfort with risk.

Initially I would put the max into premium bonds as they are easy to withdraw and surprisingly easy to win. That's £100k for 2 adults.

Nice holiday, stuff pension, the two accounts in trust for dc ... anything left put into the best rate isa each then fixed term savings bonds, allows you to then plan

A bit more info about me if that helps:

Age 46
Married with 2 Dc's in teens (13 & 15)
No mortgage
House worth probs £400k ish
Private pension plus a pension from an old job
Self employed with high job security
No other debts
Would like to retire early but also do love my job
DC's likely to go to higher education
Household income around £80k a year (I'm the main earner on around £50k)
Currently have some savings in premium bonds and a s&s isa

I'd love to be able to help our kids but also help them recognise the value of money and not taking it for granted. They already have CTF's with around £20k each in them that have been saved for through their lives so far. A big chunk of the inheritance will be put aside for them.

I'd love to travel and live more, have adventure and enjoy some of the money too as I do often think carpe diem esp when I'm hearing more horrific stories of folk keeling over not far from my age!

Thanks for all the replies so far

So are you paying into your private pension regularly as you are self employed? Have you done a forecast about how much your 2 pensions will yield at your preferred retirement age? Ditto your DH?

On your household income your Dc will get very little student loan so do plan for their maintenance during the Uni years.

If their ages work out you could have a magic year when they have both finished GCSE / A levels and you could take off before school holiday rates kick in and go on a fantastic extended family holiday. Once the eldest goes to Uni they might prefer to holiday with friends.

Then I would plan to travel in the early years of early retirement. Whatever suits you, Europe in a camper van, Road trip W Coast USA, Vietnam, whatever is your dream!

@BrimfulOfMash I am actually quite clueless and I'm a bit blindly paying into my pension each month but have no idea re forecasts etc. I don't even know how much is in my old work pension or how much I'll have at what age 😳😳😳

Yes a big amazing family holiday is planned for when the DC's finish their exams etc and before they no longer want to be seen with us! Retirement and travel sounds amazing, DH and I traveled a lot before having kids so it would be great to get back to that in future.

Roughly (on average) how much do people think most folk spend per child to put them through uni? Tuition fees, rent, food, travel, books, bills etc? Sounds like some parents pay absolutely everything but that doesn't sound like the majority, so just wondering what the average £££ is per year??

Thanks for all the replies. I do realise I'm in a fortunate position both job wise and inheritance wise (although it also means I don't have my parents at quite a young age so it's not all good).

OP: based on your household income and supposing your Dc study away from home but not in London, the student loan calculator would offer each Dc between £4 - 5k loan p.a expecting you to subsidise them by another £4-5k each year. And even then, this does not really cover all their costs as rents are so high for students now. More than this if they study in London.

There isn’t really an average amount that people pay because it depends entirely on your household income.

You need to study the pages on Gov.Uk.

https://www.gov.uk/student-finance-calculator/y

This is why people are saying save or prepare for supporting Uni costs.

Next priority: you need to get on top of your pension situation. You need a big pot to retire early / retire comfortably. And make sure your private pension is not overcharging on fees and the money is invested to your best advantage. Pensions advisor asap!

Do this before you start mentally spending all your inheritance.

Don't pay the tuition fees for uni - they won't have to repay the tuition loans until they're earning over £25k. It's effectively just a graduate tax.

When their entitlement to student finance is calculated for maintenance costs, it will be based on their parents' income and assuming you will financially support their living costs.

Their existing CTF might cover that depending on where they go (eg London will be more expensive).

Bear in mind that at aged 18 the CTF goes directly to the young person and not to the adult that set it up.

I’ve just inherited the same amount from my final parent. Gifting £50k to each of three adult DC for deposits, saving £100k in PB and ISAs so I have a buffer for if I fall ill, spending £50k on paying off mortgage and home projects. The final gift from my lovely parents to me is my peace of mind and security ❤️. I can pay for my own holidays 😂

Roughly (on average) how much do people think most folk spend per child to put them through uni? Tuition fees, rent, food, travel, books, bills etc? Sounds like some parents pay absolutely everything but that doesn't sound like the majority, so just wondering what the average £££ is per year??
My DC finished uni 3.5 and 3.5 years ago, they got student loans for the fees and the minimum maintenance loan. It costs us 6k per DC per year and they stayed in average uni accommodation in the South East of England (not a particularly expensive city).