How To Handle a Large Inheritance
November 16th, 2023
SUMMARY / KEY TAKEAWAYS
- There is a strange feeling when you receive a large inheritance. On the one hand, you have come into some money. Yet someone has passed away.
- It can take some time to accept the money, but when you do, you may need professional assistance about what to do with it.
There is a strange feeling when you receive a large inheritance. On the one hand, you have come into some money. Yet someone has passed away. It can take some time to accept the money, but when you do, you may need professional assistance about what to do with it.
First, Assess the Estate Income.
Sometimes, there is more than just cash, and you may inherit an estate. An estate is money and assets previously owned by the person who has passed away, minus debts owed. You can become liable for the debts as the estate owner. And you are also responsible for paying taxes if the estate generates an income. It helps to make an EIN application for an estate (US) so you don’t end up in legal hot water for not paying the taxes that are now your responsibility.
Seek Professional Guidance.
Coming into a large amount of money or an estate is an overwhelming experience for some people. You may not even know what to do with a large windfall of cash, and running an estate can be like a business. Fortunately, there are many experts out there who are more than willing to lend a hand. A good team to consider includes accountants and tax advisors, investment managers, and estate planning lawyers. These offer expert advice when making decisions.
Large Inheritance and Debts.
If you do come into money, it can be tempting to treat yourself. But it will first help to pay any debts you owe. In the USA, the average inheritance is around $46,000. It sounds like a lot, but consider this against the average debt of a US citizen of roughly $100,000. What you inherit may not even cover half of your debts. A small treat such as a vacation can help you feel better. But if you have bad spending habits then it's best to pay debts if you have any outstanding.
Consider an Investment Portfolio.
On the rare occasion, you have no debts or some money left after paying them, you may want to increase your income or use the money to secure a better future. No one is suggesting investing all you have but investing some money into safe portfolios could be a good idea. Real estate investment trusts, ISAs, and pensions are among the safest investments that offer substantial returns over a long period. Of course, your money is always at risk when you invest anything.
Think About How to Best Use It.
Perhaps you feel it is best to use inheritance for the betterment of others as well as yourself. Maybe the person who left it to you would be amazed by that. So, what better way to honor their legacy? Of course, you can help yourself and secure your future. But you can also offer college money to your children or a relative, set up a trust for your kids, or donate a large sum to charity. Being generous with your money can bring happiness and security to those without it.
You must first assess an estate and its debts if you come into a large inheritance. Yet, it also helps to use inherited money for personal debts too. And helping others is always an option.
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Ontology of Value (November 16th, 2023). How To Handle a Large Inheritance. Retrieved from: https://ontologyofvalue.com/how-to-handle-a-large-inheritance/
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