What to consider when Inheriting
Mandy Rodgers is a Wealth Manager with St. James’s Place Wealth Management and has kindly put together the following considerations that you should have a think about when receiving an inheritance…
Receiving an inheritance can generate mixed feelings – sadness that a loved one has passed away, possibly relief that maybe some debts can be paid off, or uncertainty over how best to make use of your inheritance in your lifetime whilst ensuring there’s something left to pass down to future generations.
Receiving an inheritance may be the first time you’ve had to worry about investment options and can be quite daunting if that’s not something you have experience of. There is no one right answer as everyone’s circumstances are different, but some things to consider are…
- Paying off any expensive credit cards & store cards first
- A lot of mainstream mortgages today are at very competitive interest rates, around the c. 2% mark, so it wouldn’t necessarily make sense to pay down a mortgage as your money could be put to better use depending on your attitude to investment risk & return.
For some people, they just want to know the mortgage is gone and paid off. For others, if the mortgage payments are affordable and they’re happy the mortgage will be paid off before retirement they might prefer to invest their inheritance elsewhere to potentially generate capital growth… or maybe a middle option would suit, where they could pay off a lump sum (to reduce the monthly mortgage payments or reduce the mortgage term) and invest the rest (take proper advice on your situation, and check with your lender first to see whether early repayment charges apply)
- One thing’s for sure, with cash savings interest rates at a fraction of 1% and inflation at c. 2%, money held in cash will go backwards in real terms, so that’s probably not the answer
- Many people have in the past opted for ‘bricks & mortar’, and have bought Buy to Let properties. Whilst property has been a good performing asset class the tax rules around second properties have become particularly punitive and so on its own, residential property is becoming less attractive. Coupled with the fact that it brings with it the hands on hassle of dealing with tenants, and managing repairs & maintenance (which are often underestimated), it’s not always the ‘passive’ investment it’s thought to be
I work with clients to provide professionally managed and well diversified investment options that suit their personal circumstances and objectives. These are tailored to their attitude to risk and regularly reviewed and managed by me to form part of their overall financial life plan. Using the most appropriate investment tax wrappers is also important, to ensure everything is as tax efficient and admin easy as possible during your lifetime, and will pass down to the next generation as tax efficiently as possible too. If you’ve had to pay Inheritance Tax on your inheritance, you’ll understand the importance of timely tax planning!
The key point is to get some proper financial advice and look at options that work for you and your situation. Unless you’re familiar with the financial industry there’s every chance you
and a professional can inform you and guide you through the options to make the best decision for you and your family.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
The Partner Practice is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
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