How to get yourself an inheritance (short of murder)
The stage is set. It’s a closed house, out in the country. No one can come in, no one can come out. There’s your wealthy aunt / adopted grandmother / old schoolteacher and you’ve tried worming your way into her affections, only to be confronted with scorn and disdain. You know she’s going to change the will, so what can you do but take immediate and drastic action?
Ok, that’s lifted directly from Agatha Christie. In reality, life just doesn’t happen that way and very few of us have butlers anymore, so Poirot would be no help. An American association estimates that in America about 20% of baby boomer householders are lucky enough to get an inheritance, and the average amount received is $64 000. I couldn’t track down a similar estimate for us Aussies, but lets assume that around 20% of baby boomers householders have benefited from a fairly sizeable inheritance.
So what do you do next?
The ATO comes through for us here once more (seriously, how do they collate all this information into one place? It beggars belief), and have a good guide to what records you may need to keep should you inherit, http://www.ato.gov.au/individuals/content.asp?doc=/content/36596.htm
In Australia, inheritance tax was abolished in 1979 and for an interesting paper on what happened when it was, check it out here:
http://econrsss.anu.edu.au/~aleigh/pdf/DeathAndTaxes.pdf
Apparently the date of death for about 50 people changed date once inheritance tax was abolished so inheritances wouldn’t be affected by the tax. One wonders if the same thing might happen in 2010 when the US abolish the inheritance tax as well.
Once you’ve worked out the legal side of things, here’s what you might want to consider doing next.
Do not immediately buy shares in a dot.com or private plane
Think about what you want to do with the money, other than spend it all on lovely things you’ve always wanted. Inheritances can be sizeable, think about what you really want, like paying off your mortgage or retiring a couple of years earlier than you otherwise would.
Think about how to achieve your goals
Put all the money into a term deposit, or have a chat with a financial advisor about setting up an investment portfolio. Work out how many years your goals will take to achieve, or when you would like to put The Freedom Plan into action. Build your financial strategy around that timeline.
Clear your niggling debts
If you’ve got a credit card debt you can’t shake, an inheritance might be the perfect opportunity to get yourself clear. Work out what debts are hindering your financial capacity and get rid of them. Invest the rest in The Freedom Plan.
This forum
http://episteme.arstechnica.com/eve/forums/a/tpc/f/599009962631/m/534006305831
Some interesting advice for a lucky guy with an inheritance. One of the suggestions I liked was to put aside 5% of your inheritance to spend guilt-free, and then be sensible with the remaining 95% and put it into debt or investments. It’s good to mark the moment with a celebratory trip or absurdly expensive meal, as you’ll be more dedicated to saving if you feel like you’ve had a bit of luxury as well.
Just don’t hire a butler with your inheritance money. As Miss Marple would warn, it’s just too risky a venture.
Have you ever inherited money, and what are your tips for how best to use it?
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