Receiving a family inheritance is full of emotion and uncertainty. The inheritance can bring out the worst in people if family members have not planned in advance. In spite of good inheritance planning, there can still be obstacles and bickering.
As baby boomers age and pass on, more money and financial wealth will be passed on than ever before. It is never too late to make family inheritance planning a priority. Some aspects of family inheritance planning should take place earlier in life, others after an inheritance is received. These tips should help prevent some of the discomfort and answer a few questions about managing family inheritance.
If You Are the Bequeather…
Plan in Advance
Managing a family inheritance begins before there is an inheritance to manage. Maintain strong relationships with family members. Talk about everyone’s expectations. Sit down together and discuss any concerns including who will be receiving great-grandma’s gold brooch.
Make a Will
Seek the advice of a reputable lawyer. Consider who will be inheriting from you and how everyone involved will feel about your choices. Be specific about the “who” and “how much”. Establish any contingencies or trusts that seem appropriate.
Communicate Your Wishes
Open communication in most every situation is the key to success and family inheritance planning is no different. Let your family members know your wishes and your reasons ahead of time. This can prevent the squabbling that can destroy families who are unprepared to manage a family inheritance.
Leave Your Affairs in Order
Maintain records which can be easily located instructing who the executor of the estate is to be. If insurance policies are part of the inheritance, keep records of the policies and redemption requirements somewhere accessible. A copy of your will should also be in a safe place. A safety deposit box may be the best place for such information. Don’t forget to leave information so that the executor knows where to locate the box.
If You Are The Beneficiary…
If There Is No Will
Consult a lawyer who can help resolve issues regarding the estate. Probate court is a complicated and often drawn out circumstance and you will need legal assistance to maneuver through it. Aside from the division of the estate assets, a family or tax lawyer can help with complex inheritance tax issues whether or not a will exists.
Consider Your Dreams
Depending on the amount inherited, the management of the funds may be easy or quite daunting. Small amounts may allow for the purchase of something long desired such as a big screen television, a vacation or the remodeling of your home. Larger amounts may open possibilities you never dared to imagine. Take some time to evaluate your options and determine what makes the most sense. There is no urgency in making your decision.
Use a Financial Planner
If there is a lot of cash involved, seek the services of a reputable financial planner. Even a few thousand dollars invested properly can increase with time into a sizable amount. Once you have outlined your dreams, a financial planner can advise what options might best help you achieve those dreams. Perhaps early retirement is one of the goals. A financial planner can tell you based on the amount of money and the number of years you are willing to invest, what financial instruments best suit that goal.
Revisit Your Own Insurance Needs
Perhaps your inheritance came in the form of valuable artwork or expensive jewelry. Maybe you decided to purchase a rare book collection with some of your inheritance. You may need to have these things insured. Also, if the inheritance you hope to leave behind is large, you may wish to increase the life insurance you have to offset the amount lost in taxes.
Following these tips may not eliminate all the discord caused by a family inheritance but can help. Planning ahead for your loved ones can avoid causing friction. After all, they are your loved ones and the last thing you want is for the family to be torn apart by squabbling at a time when they need to lean on each other. If you are the recipient, stay calm and give yourself time before deciding what to do with the inheritance. Prudence is the key here.