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A Guide on How Inheritance Works

A Guide on How Inheritance Works
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Many complexities come with inheritance. These challenges range from filing inheritance tax to discrepancies during the distribution of property. There might be problems whenever one of the beneficiaries feels they are not receiving a fair share of the inheritance money or property.

In other cases, some people don’t know how to claim the inheritance money, how to remit inheritance tax, or what to do with the shared property. Below is a guide on what inheritance entails.

Claiming Family Inheritance With or Without a Will

There are many problems and disputes that arise when subdividing property without a will. Some members of the family might feel cheated if they don’t get what they feel is the fair share of the inheritance. In such a case, family inheritance is governed by the rules of intestacy. According to these rules, the spouse of the deceased is entitled to a part of the property while the rest should be distributed to the nearest relatives.

In case the deceased left a will, the first step is to determine whether the will is genuine or not through a probate court. Once the will is reviewed and authorized, all the debts of the deceased are settled and transferred to beneficiaries. A will specifies the amount or share that each beneficiary will receive.

Inheritance Tax

During the transfer of property, the beneficiary is required to remit an inheritance if the value of the property is above the taxable threshold. For instance, in the UK, if the total value of the inherited assets is more than £325,000, you are required to remit inheritance tax.

However, determining the amount to pay as inheritance tax depends on the kind of valuation done on the property. If the wrong valuation is done, you might pay more or less than what is required by law. Undervaluing the property translates to an offense for trying to defraud the government. It’s, therefore, advisable to use professionals like Clearance Solutions to get accurate probate valuation.

Managing an Inheritance

Most people are usually not prepared to receive inherited property, money, or assets. While some individuals might have their financial goals figured out, others don’t have an idea of what to do with their share. It’s vital to get a financial advisor if you are not sure what to do with the inherited property. Your advisor will help you draft a financial plan that will ensure your money grows over time.

Inheritance Restrictions

The deceased can include restrictions in the will that must be followed. For instance, if the beneficiary is too young, the will might specify that the property is transferred when he/she reaches a certain age milestone.

The will can also specify that the amount to be given to the beneficiary in installments instead of one large sum. In other instances, the inherited property might be assigned specific uses such as educating the beneficiary or paying for health bills, among others.

It’s vital to read the fine print to avoid any misunderstandings during the transfer of property.

Dealing With Creditors

There are instances where the will writer leaves some outstanding debts, maybe from loans or other forms of borrowing. This might leave the deceased’s family struggling to repay the debt.

However, you have no obligation to settle debts left behind by the deceased. In case creditors attempt to collect debts from you, direct them to the property left behind by the deceased.

Bottom Line

Inheritance is a delicate subject that requires professional guidance. Whether there is a will or not, it’s possible to subdivide the property without any discrepancies. Make sure you have a clear plan on what to do with the inherited property.