Receiving an inheritance can be life-changing. It can provide you with the financial security to pursue your dreams or make significant changes to your lifestyle. However, it can be overwhelming, and you may worry about making the “wrong” decision that could impact the rest of your life.
If you have received an inheritance, here are some steps that can help you understand how to get the most out of it.
1. Understand the probate process
The first thing to do is make sure you understand the process and what you’ll inherit.
In some cases, the process can be time-consuming and complex. For instance, if the deceased has not left a will or they have complicated assets, it can take more time. In some cases, a will may also be contested. Make sure you know what the timescales are and any potential issues. The executor of a will can help you with this.
Tax laws can be complicated and as an expat this can be magnified. Depending on specific tax laws where the benefactor passed away, where their will is read, your country of residency and/ or potentially your citizenship, Inheritance Tax may also be due. This could reduce the inheritance you receive and needs to be planned for. We always recommend getting good tax advice.
2. Take your time
When you receive an inheritance, you may feel like you need to make immediate decisions. But pausing can give you time to think about what you really want, avoiding emotional decisions.
It’s not uncommon for beneficiaries to worry about how their benefactor would want them to use the inheritance. It can result in conflicting decisions and may mean you make choices that aren’t right for you. If you have the means to do so, leaving your inheritance largely untouched, until you have a plan is a good idea. This is where speaking with your financial adviser about your objectives and what is most important for you is a valuable exercise and an important part of the process. We expand on this below.
3. Review your current financial situation
By reviewing your current financial situation, you can understand where the inheritance will have the biggest impact. It provides a baseline to start making changes to your finances and lifestyle and can be considered in the context of the goal clarification below.
4. Set out what you want to achieve
Setting out your goals and priorities can provide direction when you’re deciding how to use an inheritance. Think about the lifestyle you want, now and in the future, and how an inheritance could help you achieve that.
This is an important part of our process when you speak with one of our team at Black Swan Capital.
5. Speak to a financial planner
There are a lot of things you need to consider as an expat when deciding the best way to use an inheritance to help you reach your goals. A financial planner can help you create a blueprint that will enable you to get the most out of your money, centred around your goals. Financial planning isn’t just about calculating how much you have either; it’s a chance to understand how your decisions will affect your overall lifestyle now and in the future.
If you have received an inheritance and would like to talk about your plans and options, please contact us.
6. Schedule a review
While setting out a plan is great, things do change. Whether it’s your finances that change or your wishes, or even the country that you are living in, scheduling regular reviews and taking time to think about what you want is important. It can help make sure everything stays on track and you’re not faced with any unexpected surprises. The frequency of reviews will depend on your circumstances but, as a general rule, once a year is a good idea.
7. Plan your own legacy
Having benefited from an inheritance, it’s worth setting out your own legacy. When you pass away, who would you like to benefit from your assets? The decisions you make about your estate could impact the lives of your loved ones.
This can be more complex if you are an expat and you need to consider the specific laws in the country in which you are living as well as your citizenship. Think carefully about how you’d want your assets distributed and then write this into your will.
Even if you already have a will in place, you should review it and make sure it is relevant for your country of residence. As your circumstances change over time, your wishes may change as well.
We understand that receiving an inheritance can be a confusing time when you’re expected to make decisions. If you’d like to talk to a financial planner about your plans, please contact us.