Receiving an inheritance can be massively life changing and can be highly stressful. But it doesn’t have to be. Here are the things you should know:
Taxation
Assess the tax implications of your new wealth. This includes understanding capital gains tax and other potential liabilities specific to the relevant tax law. Proper tax planning can save you a significant amount in the long run. By working with your financial adviser, you can develop strategies to minimise your tax burden and you are fully aware of your tax affairs.
Debt
Use a portion of your new wealth to pay off high-interest debt. This not only improves your financial health but also gives you more flexibility and peace of mind. Start with debts like credit cards, which often carry high-interest rates. Reducing or eliminating these debts can significantly increase your monthly cash flow and improve your credit rating, setting you up for better financial stability in the future.
Investment Once you have a handle on your debts, consider investing your new wealth. Short-term investments like term deposits or savings accounts can provide liquidity while you plan your long-term strategy. Consult with a financial adviser to explore investment options that align with your risk tolerance and financial goals. Proper investment planning can help your wealth grow and support your long-term objectives.
Future Planning
Develop a sound financial plan. Whether it is buying a new home, planning for retirement, or setting up education bonds for your children, having a clear plan helps you make informed decisions. Ensure that your short-term actions support your long-term goals to create a perfect and cohesive financial strategy.
Professional Advice
Seek the advice of your trusted financial adviser. They can guide you through the complexities and help you make informed decisions. Remember, while they provide valuable advice, you remain in charge of your financial future. Stay involved in every decision to ensure your goals and values are met.
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