There are numerous reasons why it can be difficult to navigate inheritance and IHT. Inheriting a substantial sum of money is a profound life event, often accompanied by emotional and logistical challenges. Beyond the grief of losing a loved one, managing a significant financial windfall requires careful consideration of numerous factors.
Whether the inheritance comes in the form of cash, real estate, investment accounts, or life insurance, understanding the implications and taking strategic steps is crucial.
Different asset types have distinct tax implications and regulations. Finances, securities within retirement accounts, or annuities may be subject to taxes. Understanding the nature of your inheritance, including how funds will be transferred and your rights over the assets, is essential.
Given the complexity of inheritance management, forming a team of experts is highly recommended. This team may include lawyers, accountants, and, most importantly, a financial advisor. A financial advisor provides personalised financial services, helping you prioritise goals, develop a financial plan, and adjust as needed.
Evaluate the inheritance carefully, considering assets like cash, stocks, bonds, retirement plans, business interests, and real estate. Talk to your financial advisor about potential estate taxes and implications.
While inheritances are not always taxable income, certain earnings and assets may be subject to taxation when cashed out. A Wealth Manager can help identify specific tax liabilities and strategies to minimise consequences.
Re-examine your financial needs and goals. Establish a budget outlining income, expenses, and potential investments. Discuss your plans with your financial advisor to ensure alignment with your risk tolerance.
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Collaborate with your financial advisor to create or update your estate plan. This involves deciding how your assets will be distributed among beneficiaries, potentially utilising trusts for specific purposes.
Engage in open conversations with family members about the inheritance. Preparing heirs for a wealth transfer can prevent misunderstandings, minimise disputes, and facilitate a shared vision for using the funds.
Usually, those with estates valued over £500,000 would be required to pay Inheritance Tax. With the help of a financial adviser, knowledgeable of the tax system, tax liability can often be limited.
European Union member countries have put systems in place to avoid double taxation. However, it is necessary to consult a financial adviser early on to ensure that through thorough financial planning, taxes can be minimised where possible.
Despite policymakers viewing inheritance tax as a means to reduce wealth inequality, it is widely known as the ‘death tax’ and faces opposition. Consultation with a financial adviser becomes crucial to navigate the complexities.
In conclusion, the inheritance process requires thoughtful management, and enlisting the expertise of a financial advisor is a wise move. Navigating sudden wealth becomes more efficient and secure with the guidance of professionals who can ensure the longevity and purposeful use of your newfound financial resources.
We’ve Moved Offices on 1st August 2025!
Private Client Consultancy is excited to announce that we have moved to a brand-new office space, designed to better serve our clients and reflect our continued growth.
Effective Date: Friday, 1st August 2025
New Address: Urb Jazmin De Miraflores, C. Jazmín, 2, Mijas Costa 29649, Malaga, Spain
Our phone numbers and email addresses remain unchanged.
All in-person meetings scheduled from 1st August onwards will take place at our new location. Please update your records accordingly.
We look forward to welcoming you to our new space!
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