Deposits funded by an inheritance

A deposit has to come from somewhere, and lenders want to know where. When the answer is an inheritance, you see it in the source-of-funds paperwork. The money may have arrived recently, after the death of a parent.

The deposit is usually only part of what was inherited, and inherited money raises questions beyond the purchase: what to do with the rest, how it sits with tax, and what it means for the client’s own estate. You arrange the mortgage. The regulated advice on the rest is E&G’s, and it has to be offered gently, because the client may be bereaved.

Verifying an inherited deposit

Verifying a gifted or inherited deposit is routine for you, and the paperwork shows where the money came from. An inheritance shows up as a payment from probate or a transfer from a solicitor handling the estate. You establish the provenance so the lender is satisfied and the case can proceed.

In doing that, you learn that the client has come into money, and usually why, at the point they are making a large decision with part of it.

Taking care with the client

If the inheritance follows a death, the client may be buying a home in the same months they are grieving a parent. The mortgage is the task in front of them, and you do it well and without adding weight to a hard time. A conversation about what to do with the rest of the money can wait until it is welcome.

Do not treat a bereavement as a sales opportunity. If the moment for a wider conversation never comes, the mortgage, which is what the client asked you for, is still done.

The deposit is usually only part of it

Often the inheritance is larger than the deposit, and the remainder sits in a current or savings account while the client works out what to do. Left there, it earns little, loses value against rising prices, and can stay there for years.

What should happen to that money is regulated advice: whether any of it is invested, how much is kept accessible, and how it fits with a pension or an ISA. You must not tell the client to invest it or where to put it. You can point out that a lump sum sitting in cash is a matter for regulated advice, and introduce them to E&G.

Tax sits in more than one place

Inheritance tax on the estate is normally dealt with by the executors before the money reaches the client, so a beneficiary usually receives their share with that already settled.

What can still matter is the client’s own position from here: the income or interest the money earns, how any investment is structured, and how a larger amount fits a longer-term plan. These are questions for E&G and, where relevant, an accountant. You must not advise on it.

The client’s own estate

An inheritance can move someone from having little to pass on to having a good deal. Their own will may be old, or may not exist at all. The beneficiary nomination on their pension may be out of date. The property they are buying adds to an estate that may now need planning for the first time.

This is estate-planning work, and it sits with E&G and its professional connections. You may be the first person in a position to notice that it has become relevant, because the purchase and the inheritance have happened at the same time and both are in front of you.

Family circumstances around an inheritance

Sometimes the inheritance is shared with siblings, a family home has been sold to release it, or money is arriving in stages as an estate is wound up. Because of where it came from, the client may feel a responsibility to use it well.

This shapes how the conversation should be held: unhurried, led by the client, and with respect for where the money came from.

Where the regulatory line sits

You arrange the mortgage and verify the source of the deposit, and you can advise on protection. You must not advise on investing the inheritance, on the tax around it, or on the client’s estate. Those are regulated advice, and E&G provides them.

Raising the subject and making an introduction is within your permissions. Recommending what the client should do with the money is not.

Advice after an inheritance

Someone who has just inherited a large sum can benefit from advice, and may not look for it on their own while grieving.

An introduction from a professional they already know may be how they get advice. Offer it with care, at a time the client can take it in.

How the introduction works

With the client’s consent, and at the right time, you make a short warm introduction to E&G. E&G makes contact with the same care, and the first conversation is a fact-find, free of charge. Only what the client has agreed to is shared.

You stay in view through the partner portal. If the client wants to wait until the estate is settled, or until they feel ready, the introduction waits until then.

What the introduction does for the client

Handled at the right time and in the right tone, an introduction connects a recently bereaved client to a qualified financial planner. They get help with money they did not plan to have, at a point when a mistake can be hard to reverse.

The value to your firm comes after that, from a relationship that continues and builds. It depends on the client having been looked after first.

Questions brokers ask

Isn’t it insensitive to raise financial advice with someone who has just been bereaved?

It can be, if done as a pitch or at the wrong moment. The mortgage is the task the client came for, and it comes first. A conversation about the rest of the money waits until it is welcome, and if it never is, it is left. Offered gently and at the right time, connecting a grieving client to a qualified financial planner gives them access to advice when they may have none.

Can I tell the client what to do with the money they haven’t spent on the deposit?

No. Whether and how to invest a lump sum, how much to keep accessible, and how it fits a pension or an ISA are all regulated advice, and they sit with Equity & General. You can point out that money sitting in cash is a matter for regulated advice and introduce the client to a firm authorised to give it. You must not recommend where the money should go.

The inheritance tax was already paid by the estate, so what is there to plan?

The estate’s inheritance tax is usually settled by the executors before the client receives anything, so that part is often done. What remains is the client’s own position from here: the income the money earns, how any investment is arranged, and the fact that their estate has grown and may now need a will and up-to-date nominations. Those are questions for E&G, and the client may not have considered them.

What if the deposit is a gift from living parents?

Much of it is the same. You still verify the source of the gifted deposit for the lender, and the parents making the gift often have their own questions about tax and their estate on which they may not have taken advice. With consent you can introduce either the buyer or the parents to E&G. The regulated advice is ours, and the introduction and the mortgage are yours.