Receiving an inheritance will usually come following the passing of a parent. This isa distressing time, and we have often found that the issue of receiving a fair share ofan estate leads to relationships between siblings becoming strained.
Following the legal directions from the Lawyers of the estate is important, as isreceiving professional inheritance advice from a financial advice professional.Lanham Financial Advice have more than three decades of experience is providinginheritance advice and offer expertise to ensure that you make financial decisionsthat 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 taxon 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 parent arestill alive is important when dealing with the complexities of superannuation.
Superannuation is divided into taxable components and tax-free components. Tax at15% 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 fundswithin the estate, but a professional financial adviser will provide strategic ways ofminimising 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 of 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 on 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.
