Inheritance is not something that is openly discussed and in recent years most beneficiaries lose their inherited wealth to mismanagement more than anything else. Since there are discussions about people who find themselves suddenly bestowed with unexpected wealth but don’t really know what to do with it and have a tendency to squander the money until it’s gone. An inheritance is constituted by a will and an executor is given the main task of pooling the deceased assets and pay off all the liabilities prior to distributing the remaining wealth to the beneficiaries.
Even before finalizing the distribution the beneficiaries should communicate closely with the executor regarding their plans for the inherited estate or shares. If there are inherited estates and they plan to sell it and opt for cash considerations, it is best done under the name of the deceased because the taxes will be considerably less. If the inheritor decides to keep the property and decides later on to sell, the taxes will be higher; hence the inherited amount will be smaller than expected. It may also become a burden than a blessing if you have to cope with annual taxes on the property. Inherited shares should also be handled with care. A beneficiary with no income will benefit best from this because they can keep the shares without any taxes.
Superannuation again comes into the picture for inherited estates. Assuming that superannuation will go to the estate may be a bad assumption. The member’s beneficiary nomination affects whether the super goes to the beneficiary or the fund trustee.
What should you do with your inheritance?
Now that you have received your inheritance what should you do, or not do? Do use it to get out of a bad debt or make a sound investment for the future. You can also use it to pay off an old loan; this will earn you better credit rating and get you a new loan that you can use to invest in something else. If you are in bad debt don’t try to make an investment and attempt to pay off your debt with the proceeds from your investment. Why? Because investments can take time to get returns and by the time you finally get something from it, you may already be neck deep in debt.
What’s the best thing to do when you get an inheritance? Consult a financial and legal adviser that is knowledgeable in handling such matters. Financial consultants will not only make the process easier for you to understand but they will also give you sound advice as to how you will benefit most from your new found wealth.