subject: Inheritance Money: Tips for Expanding Personal Wealth [print this page] Inheritance Money: Tips for Expanding Personal Wealth
Receiving inheritance money can improve personal finances, but is typically a bittersweet experience. While most people enjoy receiving an unexpected financial windfall, few people enjoy receiving funds because a loved one has died.
When inheritance money gifts are excessive, beneficiaries should consult with a financial planner to develop an investment plan. Sadly, heirs often embark on spending sprees spurred by grief and end up with nothing. Others waste their inheritance on unnecessary items, such as fancy cars or expensive jewelry, simply because they have no money sense.
Inheritance cash is usually gifted through decedents' last will and testament or a trust. However, individuals can gift money to heirs while they are still alive. The IRS allows annual tax-free gifting of up to $12,000 per person or $20,000 per married couple.
When decedents die without leaving a legal Will, distribution of inheritance money and property is determined by state probate laws. Decedent assets normally transfer to the surviving spouse or direct lineage heirs including children, parents, and siblings.
Estate assets which are not transferred to a trust must undergo the probate process. Probate is necessary to settle decedent estates. On average, probate lasts about 6 months. Intestate estates (those not protected by a Will) normally require additional time. Inheritance property cannot be distributed until all other aspects of the estate are settled.
Inheritance money can also be received through beneficiary designation. Individuals can assign beneficiaries to receive money held in bank accounts, retirement accounts, and financial portfolios. These types of accounts can avoid probate through assignment of beneficiaries and funds are distributed after specific protocol is followed.
Estate administrators obtain date-of-death values from financial institutions holding the accounts. These forms are sent to the county tax assessor to verify decedents do not owe taxes. The estate must bring taxes current before funds can be distributed. Once tax forms are validated and returned, beneficiaries provide ID verification and a copy of the decedent's death certificate to claim their inheritance money.
Financial consultants can help heirs determine the best way to invest funds and minimize taxes. In today's economy it is more important than ever to develop a solid investment plan and save for the future. Using loved ones inheritance gift to improve your life is the best way to thank them.
Many investment opportunities exist. Some of the more common include real estate, certificates of deposit (CDs), money market accounts, stocks and bonds, and commodities. Some people use inheritance money to start or expand a business. Others establish a trust so they can pass along inheritance gifts to their loved ones.
What you do with your inheritance is up to you. Taking time to become educated about investment opportunities allows you to expand your personal freedom and afford the things you want. Chances are the person who included you in their Will would want you to make the most of your inheritance money gift.
