Question By: Many of us are anticipating inheritances when our loved ones pass away. In fact, depending on our individual financial circumstances, we may be counting on those inheritances to pay expenses. Inheritances can be life-changing, allowing people to pay off bills, invest in businesses, go to school, or simply continue with a certain standard of living.
How Inheritance Works When There’s a Will
When someone dies and there is no living spouse, survivors receive the estate through inheritance. This is usually a cash endowment given to children or grandchildren, but an inheritance may also include assets like stocks and real estate. Asset distribution is determined during the estate planning process, when wills are written and heirs or beneficiaries are designated.
The will specifies who will receive what. To distribute everything evenly, one can simply list beneficiaries. If certain items are to be left to certain people, that must be spelled out in the will.
For the inheritance process to begin, a will must be submitted to probate. The probate court reviews the will, authorizes an executor and legally transfers assets to beneficiaries as outlined. Before the transfer, the executor will settle any of the deceased’s remaining debts.
It’s important to remember that an inheritance, be it equal or unequal to other family members, is never a guarantee. Investors should make efforts to become financially independent outside of an “expected inheritance” and then use any type of windfall that is granted to further financial goals and objectives over the long-term.
Do not expect an inheritance to solve financial problems
Many people find themselves without enough disposable income to save enough for retirement. They may be burdened by student loans, mortgages, credit card debt, child-rearing expenses, and other financial obligations. They might hope that an inheritance will one day come to the rescue and allow them to retire comfortably. According to the most recent survey on inherited wealth from HSBC, 49 percent of working age respondents who expect to receive an inheritance believe the money will partly or completely fund their retirement
Relying on an inheritance to solve financial problems is a bad idea because most people will not receive a substantial sum not enough to pay for retirement, and in most cases, not enough to even pay for one year of retirement, said Jamie Hopkins , professor of retirement planning at The American College of Financial Services in Bryn Mawr, Pennsylvania. It is hard to rely on the money because inheritances are often unpredictable: it could be substantially less than expected or the person could leave their money to someone else. “However, even a small inheritance can make a big difference by allowing you to better manage debt obligations or save more money,” he said.
For most people, your expected inheritance will be much greater than the amount you would want to get in advance. Keep in mind that you pay fees to have us purchase a portion of your inheritance. You do not want to get a larger advance than you need, because you want to preserve as much of your inheritance as possible. Inheritance Loans USA will work with you to help you figure out how much of an advance you need to give yourself opportunities before the probate process is complete.
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