Introduction
Inheriting money when someone close to you dies brings both opportunities and challenges. Taking some time to think things through can help you make the right decisions for you.
An inheritance can offer financial security or the chance to pursue dreams that were out of reach before. But it can also be an emotionally difficult time. Any additional wealth or change to your circumstances can be an ongoing reminder of your loss. It can also feel overwhelming deciding what to do, and balancing all the competing priorities and demands.
Whether you've inherited a substantial sum or a smaller amount, it's a good idea to approach your inheritance thoughtfully and strategically, and seek financial advice where needed. Here's a guide to help you navigate this process.
First steps?
1. Wait until you have probate and have paid inheritance tax
Before you commit to spending any substantial sums, it’s important to wait until the probate process is complete and any inheritance tax has been paid. Probate is the legal process of handling the estate of someone who’s died, and it can take many months, especially where property is involved. During this time, the estate is assessed, debts are paid, and the remaining assets are shared out to the beneficiaries.
Rushing into spending before this process is complete could complicate the process or even cause legal issues. However, you can start to take advice and plan while waiting for probate to come through.
2. Cope with the emotional factors
Inheriting money after someone close to you dies can stir up a whirlwind of emotions. It's important to acknowledge these feelings and give yourself time to process them. If you find yourself feeling overwhelmed, consider talking to a trusted friend or asking for help. Remember, you don’t have to make any decisions immediately.
3. Find somewhere to deposit the money
Once you have received your inheritance, it's wise to find a safe holding place for the money. You should consider how long you need to make plans and how quickly you’ll need to access it to then decide on the most suitable product.
4. Manage emotional spending
If you know that you’re prone to spending, you might want to take extra precautions. Consider setting aside a small portion of the inheritance for immediate use – perhaps for a treat or a short holiday or much-needed break. This can help satisfy any immediate urge to spend without putting longer term plans at risk. Meanwhile, the bulk of the money remains safe, giving you time to plan your next steps.
5. Paying off debts
One of the first practical considerations could be whether to use some of the inheritance to pay off any outstanding debts. Clearing high-interest debts, such as credit cards or personal loans, can reduce stress now and in the future.
Paying off a mortgage or other large debts could also be an option, but it’s worth taking advice when it comes to big decisions.
Next Steps
1. Assess what you would like to do
Once you've taken your first steps and cleared any pressing debts, it's time to think about what you really want or need to do with the inheritance.
Ask yourself some key questions:
How important is it to you to take into account what person who left you the money would have liked? They may have had an idea of how you would spend the inheritance, and may even have told you what they hope you will do.
What are your personal goals? Would you like to improve your home, take a dream holiday, change careers, or save for retirement? This is your chance to reflect on what truly matters to you.
What is your attitude to risk and security? There is no right answer here. Everyone has different priorities, and different ideas about how much they need to save or invest for security now and later in life.
Who else do you need to consider? If you have a husband, wife, partner, older children or other close relatives they may have ideas or even expectations about what will happen to the money. Talking about it honestly and as soon as possible can help avoid arguments, and address their needs and wishes if appropriate.
2. Consider all the options
There are countless ways to use an inheritance, and it's worth thinking through a range of possibilities before making any decisions. You might want to invest it safely, contribute to your pension, or set aside money for your children’s education.
Alternatively, you could use the money to travel, pursue further education yourself, or even start a new business. The key is to ensure that whatever you decide aligns with your long-term goals and values.
Many people take the opportunity to give a gift to charity when they receive an inheritance. If the person who died was passionate about a particular charity or cause, you might want to think about making a donation in their memory. If you decide to do this and the estate has already paid inheritance tax it’s worth getting some advice. In some circumstances you might be able to seek a refund.
3. Seek financial advice
When you have a clearer idea of what you want to do, it’s important to seek professional financial advice, especially if large sums are involved. A financial adviser can help you understand the implications of your choices, whether you're looking at investment options, tax considerations, or long-term financial planning.
They can provide tailored advice based on your unique circumstances, helping you make informed decisions that will benefit you in the long run.
4. Invest or spend wisely
With the help of your financial adviser, you can develop a strategy for how to invest or spend your inheritance in a way that supports your long-term goals. Whether you decide to invest in the stock market, purchase property, or create a diversified portfolio, careful planning will help make sure that the inheritance works for you now and in the future.
Managing an inheritance can be a complex process, but by taking things step by step, you can turn it into a source of financial security and personal fulfilment.
Remember, it’s not just about the money – It’s about making choices that reflect your values, honour the memory of the person who left you the money, and support your future goals.
How Trustestate can help
A financial adviser can help you with financial planning and advise you on the best products to make the most of your inheritance and secure your future. Trustestate can help you get in touch with a trusted adviser and schedule a free initial consultation.
What we offer
Dealing with inheritance and probate can be a challenging and overwhelming process. Let Trustestate take out the hassle for a fixed transparent fee. We offer a simple, streamlined service with expert support at every stage, and can signpost to partner services such as financial advisers.
Use our Complete Probate service and we’ll manage every stage of the process – we’ll take over all the admin, apply to the court for probate, and share out the estate.
Or if the estate is simple and you have time, you can use our Grant of Probate service, and we’ll apply for probate using information you provide.
Whichever service you choose, you’ll get dedicated advice every step of the way, and an online platform to keep track of everything. Book a free call with one of our experts to find out more.