• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • About
  • Contribute
  • Contact
  • Resources
  • Forex Trade Plan

Finance Girl

Digestible finance news for all

  • Green /
  • Student /
  • Business /
    • / Employment
  • Shopping /
    • / Motoring
  • Home /
  • Money Advice /
    • / Making Money
    • / Saving Money
    • / Debt
    • Loans
  • Investing /
    • / Alternative
  • Travelling /
  • Retirement /
  • Property /
  • Life /
    • / Mental Health
    • / Eat & Drink
    • / Manchester
You are here: Home / Featured / Understanding inheritance

Understanding inheritance

May 11, 2020 by Julie Leave a Comment

If you’ve inherited money, property or any other valuable possessions, it can feel slightly overwhelming when it comes to deciding what to do with it. After all, there are so many options. Should you pay off your debts or all/part of your mortgage? Should you invest it or save it? Before you make any decisions, it’s a good idea to take a step back and carefully consider the options. Here we take a look at the issues surrounding inheritance.

Inheritance tax

This is a tax on the estate of someone who’s died, and can also apply to gifts or money they give in the seven years prior to their death. The standard rate is 40%, which is paid on anything over the £325,000 threshold, but it doesn’t apply to anything left to the deceased’s spouse or civil partner. Inheritance Tax is paid from the estate of the deceased, so the amount you inherit will already have had this deducted.

Inheritance Tax is a complicated matter, so if you’re looking at your own finances, you should consider getting advice from a financial adviser on how best to pass on your wealth to minimise your tax.

Paying off debts

Paying off some of the mortgage is a tempting option, which will probably leave you with a significant amount of extra money every month, but if you have a lot of other debt, on a loan or credit card, for example, it might not be the most shrewd move. Loans and credit cards have higher interest rates than mortgages, so it would be better to pay these off first. Many mortgage plans also come with an early repayment charge of around 1-5% of the outstanding mortgage debt − a big amount to just throw away.

Pensions vs saving

Interest rates are currently so low that it’s hard to get any sort of meaningful return on your savings. However, the new ISA allowance is a whopping £20,000, so it makes sense to take advantage of this; shop around the latest ISA products to find the best rates. And obviously, if you’re going to want to use the money in the near future, on a house or for university, for example, you won’t want to tie your money up for a long time.

If you’re thinking longer term, however, you could consider starting or topping up your pension. Unlike savings accounts (ISAs excepted), money put into pensions benefits from tax relief.

Investing

Investing your money in stocks and shares offers much higher returns than sticking it in savings, but it is up you to decide how much risk you want to take. The general rule is the higher the potential return, the higher the risk.  An alternative to stocks and shares would be to invest your money into something that will generate an income – a buy-to-let property, for example. But make sure to factor in the increased Stamp Duty charges on investment properties. 

Seek the help of a financial adviser

With such a lot to consider, you may find it helpful to take on the services of a financial adviser, especially if you’ve inherited a large amount. Look for an independent financial adviser – this means that they’re not tied to recommending only certain products or providers. Fees for financial advisers vary, so ask around friends and family for recommendations and get fees in writing before you enter into any kind of arrangement.

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)

Related

Filed Under: Featured, Tax

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

CommentLuv badgeShow more posts

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

Julie Cheung / Finance Girl

Manchester blogger with an interest in personal finance, investing and mental health.




☆ Current Favourite Reads

☆ Top Finance Book Picks

   

☆ Get Cashback Shopping Online ☆

With over 3,800 retailers including M&S, Waitrose, Argos, Expedia, Amazon and eBay!

Read how I made £521 on Topcashback here.

Recent Posts

  • 3 Reasons Why You Should Consider Outsourcing Small Business Accounting Today
  • Why You Should Consider Investing in Alternative Assets
  • Top tips for students when selling a MacBook Pro
  • How to keep your car well maintained
  • How to get accepted for car finance with poor credit
  • Different Types Of Loans
  • How to Upgrade Your Home Business Without Breaking the Bank
  • Things to consider when choosing a therapist
  • How To Improve Your Financial Capability
  • How to access help if you can’t afford counselling or therapy in the UK
  • Financial Misselling: What Is It and Can You Claim?
  • Why 2021 is the best time to buy your first home

Invest in Gold and Silver

Read my post: Should You Invest In Gold?

Footer

Me and Pancake

Goodreads

Instagram

Cowdale Lime Works
💇
Copyright © 2018 Julie Cheung