What should I do with my inheritance?

Matthew Beck is a Chartered Financial Planner Picture: Smith & Pinching (Image: Archant)

My dad died quite suddenly recently – he was only in his sixties – and has left a sizeable estate plus a life insurance pay-out, so my brother and I have inherited £350,000 each. I’ve not had to make decisions about investments before – I just have a couple of cash ISAs – and am finding it really hard to decide what to do. Should I pay off some or all of my mortgage, should I buy stocks and shares or put it into ISAs? Or do you have other suggestions?

Matthew Beck of Smith & Pinching responds:

I am sorry to hear about your father. There are lots of challenges with dealing with an inheritance, so I strongly recommend that you and your brother take independent advice at this critical point. Advice can also be beneficial if you are the executors of your father’s will and need to put together details of the estate for any Inheritance Tax that might be payable, as well as obtaining probate. You may have already completed these obligations but if not, an independent financial adviser can help value the assets in the estate and calculate any tax due.

When advising heirs to an estate, the first task I normally undertake, once probate has been obtained, is to review all the assets in the estate as they land with you. You may have inherited a portfolio of investments, property and cash in savings accounts and there will be decisions to take about what to do with each asset you now own.

The key to handling your inheritance will be a comprehensive personal financial plan. We would build this by establishing where you are in your own life now and what you want to achieve in the short, medium and long term. This involves a detailed discovery process that will give us real numbers with which to work to put your plan together.

Once we’ve established your goals, we would then consider how best to attain them. We would look at what cash you require to meet your short-term needs – I can advise on the best rates available – and explore the tax-efficiency of pension contributions and other long-term investments.

In tandem with the consideration of how to invest your inheritance, we would review your liabilities – including your mortgage – and look at the best strategy to reduce these.

Once we have established the basic structure of your financial plan, we can then build in the details. This will include establishing your risk profile to ensure that you are comfortable with the level of risk you are taking with your money. I will then recommend a tax-wrapper and range of investments that are suitable for you.

I may recommend a managed investment portfolio: at Smith & Pinching we have a range of managed portfolios that cover different risk levels and preferences, including ethical funds.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information visit www.smith-pinching.co.uk