What To Do If You’re Left Money In A Will?
By: The Wealth Advisor - May 29, 2018
If you’re mourning the loss of a loved one, combing through a will can be painful. If you’ve received assets or money, you might not know how to go about getting what is rightfully yours.
There are a few steps you can take to ensure you get what you’re entitled to, as well as figure out what to do with it.
What to do if you’re left money in a will
A last will and testament details how you want your estate handled after you die. If you’re writing a will, you’ll name an executor to handle your affairs after you die.
The will instructs the executor on how to divide your assets among your heirs.
But if you’ve been left money in a will, there are a few steps to take to get that money.
1. Talk to the executor
If you’re not the executor of the estate, find out who is and talk to them.
James Philpot, an associate professor of finance and general business at Missouri State University, said the executor is most likely overwhelmed in their new position while still mourning the loss of a loved one, so be respectful when you talk to them.
“Ask to see the last will and testament document and/or if there’s going to be [a] settlement meeting [where] the documents will be discussed,” he said.
2. Figure out if you need a lawyer
The next step is when the will goes through probate.
This is when the court system reviews the will, authenticating the document, and follows the wishes of the deceased. Philpot said if relatives disagree on anything, it can get expensive.
“It’s better to avoid getting attorneys involved,” he said.
But “if you have [a] strong and legitimate reason to have a claim to an estate that is not being honored, you can get an attorney involved.”
While an attorney isn’t required for most cases, look at how much money you’re set to receive. If the amount is roughly what you’d pay in attorney’s fees, it might not be worth it.
3. Find out if your cash gets taxed
After any debt is handled by the estate, you’ll receive your inheritance.
Although you won’t get taxed on the inheritance itself, the federal government does tax you on the earnings from that inheritance.
For example, if you received cash that sits in a savings account and accrues interest, you’re taxed on that interest.
While your allotment might not be taxed, what you do with it could be. Make sure you know how your money is handled once you get it.
4. Use the money to pay off debt
Getting an inheritance can be a huge financial help if you’re in a money hole.
Even if it’s minimal, think about using your new cash to pay of
f debt faster, including student loans or high-interest credit cards. If you’re behind on your bills, you can also use this new cash to get up to date.
If you’re making minimum payments on your loans, consider making an extra student loan payment. This can make a big dent in your overall debt.
5. Invest and save
Another great way to handle an influx of cash is to put it away so you’re not inclined to spend it.
If you don’t already have a retirement account, think about setting one up. You can do this through an employer-sponsored 401(k) or (IRA).
Even if you don’t have the means to contribute to it regularly, putting in a sizable amount can help set you up for retirement. Your future self will thank you.
If you prefer to control exactly where your money goes and what risk you’ll take, you can also consider investing the money yourself.
But don’t forget to do your homework on choosing your investments, and understand that you won’t get some of the tax benefits that come with an IRA.
Handle your new money carefully
Getting money from a loved one that has died can help your finances. But if you don’t go through the proper channels or use it wisely, you could end up losing money.
If you’re expecting money from a will, remember that it can be a lengthy, time-consuming court process before you see any of that cash.
Be patient and helpful to the executor to ensure an easy and stress-free probate. If you’re having trouble getting what you feel you deserve, be prepared to get legal help.
Article Source: TheWealthAdvisor