Inherited £500k: what should you do?
At £500,000, small percentage fees become meaningful in pounds, but so can the consequences of making a poor long-term decision.
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You can deliberately pause
You do not need to build a permanent investment portfolio the week money arrives. First understand existing finances, near-term spending, debt, tax considerations and how much of the inheritance should remain liquid.
Think across the whole balance sheet
£500,000 may change retirement timing, mortgage decisions, pension contributions, investment risk and the amount of support you can give family. Treat those as connected decisions rather than separate product purchases.
Turn adviser percentages into pounds
Choose an adviser used to sudden wealth
Ask how the adviser works with inherited cash, inherited investments and family planning. A service designed around ordinary monthly saving may not be the same as one designed around a large new lump sum.
Review how the inheritance changes the household plan
At £500,000, an inheritance may alter decisions about work, housing, retirement or family support. That does not mean every change is affordable at once. Establish net resources, existing obligations and the spending consequences of the choices you are considering.
Separate cash from property, investments or other inherited assets. A £500,000 valuation is not necessarily £500,000 available to spend, especially where an asset is jointly owned or requires sale. Retain valuations and legal documents before making changes.
Confirm whether estate administration is complete or whether the distribution is interim. A personal plan should not silently assume that all remaining liabilities have been resolved.
Compare a few meaningful scenarios
An illustrative beneficiary might compare keeping work unchanged, reducing hours or bringing retirement forward. Each scenario changes future earnings and the period over which assets must support spending. The exercise should include tax, costs and uncertainty rather than treating the inheritance as a replacement annual salary.
You can also compare helping family now with retaining resources for later needs. A gift may be emotionally important but difficult to reverse. Discuss affordability and legal or tax consequences before deciding on the form of help.
Ask the adviser to show assumptions in today's money where useful and test less favourable outcomes. A projection is a way to explore choices, not a promise that the inheritance will last for a particular number of years.
Compare services and ongoing fees in cash
A fictional 0.75% annual adviser charge on an unchanged £500,000 is £3,750 before other costs. Ask what work continues each year and whether the initial planning project is separately charged. A substantial receipt does not automatically require every asset to be managed under an ongoing percentage service.
Identify whether a solicitor, accountant or other specialist is needed for inherited property, trusts or cross-border issues. Their work should be coordinated without blurring responsibility.
Implement the agreed plan only after the ownership, liabilities and purposes are clear. Keep enough documentation to explain why each decision was made and when it should be reviewed.
Sources and further reading
MoneyHelper - Financial adviser fees ↗
MoneyHelper - Choosing a financial adviser ↗
