Be it cash endowment, bonds or real estate, an inheritance is a privilege bestowed upon us by close family members. Regardless of its size, inheritance must be managed responsibly so that the benefits not only last your lifetime but also trickle down to your children. Have you recently inherited a small fortune? Has a wealthy ancestor left you valuable property?
Financial inheritance presents a serious life-changing opportunity. Here are some tips on how to manage your inheritance…
Seek expert advice
Inheritance can come in various forms such as life insurance proceeds, investments, property or stocks. Hence, it is prudent to seek help from a financial advisor to understand the tax liabilities and sell-off implications before making any important decisions.
For instance, if you have received a sizeable inheritance in the form of stocks or bonds, you will need to undergo several legal processes to get the assets switched over to your name. A financial advisor can help you understand all financial and legal implications depending on the form of inheritance and help you arrive at a sound decision.
[Related: The what and why of writing a will in Dubai]
Invest. Invest. Invest
If you have recently come into a lot of money or plan to sell off real estate, the ideal thing would be to invest a sizeable portion of cash in saving schemes. Prioritizing your financial goals will help you ascertain the type of investment plan that suits you best. For instance, you can save up for your children’s university fees by investing in an education savings plan or secure your own future by parking money in a retirement fund.
Pay off existing debts
Nobody likes the burden of debts and the longer they hang on our heads, the higher the interest we end up paying. Inheritance money can be used to settle existing debts such as home or personal loans, credit card dues, etc. This will help you eliminate monthly expenses, save previous money that would have otherwise gone out as interest and boost daily cash flow.
Build a legacy for your heirs
Just like your ancestors, you too have a unique opportunity to leave something for your heirs and continue the family legacy. If you are financially secure and can meet your goals with a small portion of the inheritance, think about building a nest egg for your children to secure their future. Plus, you can also play a noble benefactor by setting some money aside for charity to help those in need.
And lastly, indulge!
While securing money for the future and eliminating current debts should be at the top of your priority list, one must not forget to set some money aside for themselves either. Mark a small percentage of the inheritance for yourself and do something you always wanted. You can buy a swanky new car, take a grand family vacation, or build the house of your dreams. Self-indulgence is never wrong as long as you splurge thoughtfully.