Receiving an inheritance will usually come following the passing of a parent. This is a distressing time, and we have often found that the issue of receiving a fair share of an estate leads to relationships between siblings becoming strained.
Following the legal directions from the Lawyers of the estate is important, as is receiving professional inheritance advice from a financial advice professional. Lanham Financial Advice have more than three decades of experience in providing inheritance advice, offering expertise to ensure that you make financial decisions that are aligned with your goals and life aspirations.
Estates are usually made up of the family home and contents, investment properties, holiday house, shares, managed funds, superannuation, bank accounts and deposits, along with personal property and family heirlooms.
Most family relationships fall apart when the beneficiaries can’t agree on how assets are distributed. This is particularly relevant with distributing family heirlooms.
You or one of your siblings may wish to purchase the family home or inherit shares that come with capital gains tax implications. This is where professional inheritance advice is crucial in ensuring that you inherit any asset in the most tax-effective way.
In Australia, there is no inheritance tax. However, your parent's estate may have tax on any superannuation received into the estate and capital gains tax on the sale of shares.
Receiving inheritance and estate planning advice while your parents or parents are still alive is important when dealing with the complexities of superannuation.
Superannuation is divided into taxable components and tax-free components. Tax at 15% is payable by the estate on the taxable component, but there are ways of avoiding this tax, provided you act while the last surviving parent is still alive.
There may also be capital gains tax payable on the sale of shares or managed funds within the estate, but a professional financial adviser will provide strategic ways of minimising the capital gains tax.
With the estate of a parent, one sibling may opt to buy the others out of the family home or forgo their entitlement to cash or a superannuation interest in return for a larger share of the property.
Breakdown between siblings often occurs when one beneficiary wants to purchase the family home or holiday home, but the other beneficiaries won’t agree on the market price. This is where professional financial advice and legal advice is crucial.
While you may have the opportunity of inheriting property and shares directly from the estate, most of your important decisions will come with what to do with the cash component of your inheritance.
Should you pay off part or all of your mortgage, should you gift to your children or grandchildren, should you add to your superannuation funds, should you renovate or upgrade your family home, or buy an investment property?
Often, the answer is more than one of the above, and what combination and how many dollars you allocate to each will depend on your own goals and life aspirations.
