… often passed on by means of a legal document called a will or testament. A will does not take effect until the testator’s death, and it can be cancelled or altered until then. Provisions of a will signed prior date of death state the wishes of the deceased regarding the disposition of his or her property and wealth after death to the beneficiary (a person / persons named to receive the inheritance from a will). If there are no legal obstacles, the provisions of the will are executed, subject to inheritance taxes.
If you have inherited money or other assets, make sure you understand your rights in the legal process. If in doubt, you can consider consulting a notary or a legal advisor.
Stop and think
Whether it is a large sum of money or regular income from a trust that you are inheriting, it may significantly change your financial position. It may sound counter-intuitive, but it may be best to do nothing immediately if you do not have a plan in mind. You will want to spend some time thinking about what it means to your overall financial plan.
Put the funds in a liquid, interest-bearing account until you decide what to do. Avoid the temptation to rush into spending or investments decisions, and give yourself time to cool off before making any investments or purchases you may regret later.
Draw up a Balance Sheet
You can plan much better when you have a clear picture of what the inheritance means to your overall financial situation. Add up your assets, deduct your debts and other financial obligations, and you will know exactly where you stand financially.
Pay off Debts
One of the best ways to start using the money is by paying off any outstanding debts, especially credit card or other debts that have higher interest rates. If your inheritance is big enough, you may consider paying off some or all of your mortgage. If that is not possible, you might wish to speak with your mortgage lender about increasing your payments so you can pay off your mortgage sooner.
Set Up an Emergency Fund
Consider putting some of the money aside as an emergency fund to meet unexpected financial issues without having to go into debt. It is also a good idea to set aside enough money to pay your family’s household bills and personal expenses for at least three months if not more.
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