An unexpected windfall, even if it comes as an inheritance, can sometimes provide a little happiness and relief amidst the sadness of death.
So what would you do if you woke up one morning to be told that Aunt Jean had left you £400,000 in her will?
You’d only be human if you’d immediately consider paying off your mortgage, settling your bills and planning a holiday to some far off island.
Unfortunately money tends not to stretch too far these days and many people are caught unawares, when they realise that the thousands they had in the bank only a couple of years ago, has dwindled to hundreds, and they’re back to square one, facing financial difficulty
Paying off debts
Firstly, financial experts recommend that one way of managing your inheritance is to immediately pay off any debts, which are likely to be costing you a considerable amount each month, in interest. Begin by identifying the largest and most costliest debts, and paying these off first.
Paying off the mortgage is also a good idea, if your monthly payments cripple your household budget.
It’s a cliché, but always remember to put some money aside for a rainy day. That doesn’t mean spending it on a holiday in January, when you’re feeling depressed, however. Ensure that you have the funds available, should your car break down and need new parts, if your pet falls ill and needs surgery or, if you’re self employed, that you have the money set aside for when you need time off or if you fall ill.
One way of managing your inheritance is to consider a high interest savings account, this will ensure that you’re making money from interest without actually doing any work at all. You may have decades left, so consider how you’re going to fund any additional care you’ll need in your old age.
Why are charity legacies such a bitter pill? It has been well reported that three times as many contentious probate cases have hit the courts in recent years; as families, disappointed in not receiving as much inheritance as previously thought, fight for this much needed cash injection.
The problem? It’s not usually that cousins, friends or colleagues have benefited instead, but animal charities have received the legacies.
In some cases, estates valued up to £1 million have been left to charities including the RSPCA – a move which has staggered and even angered many family members.
Charities have long since identified bequests as a means of raising significant funds, with many focusing their marketing campaigns on securing a greater number of bequests. It was inevitable therefore, that the number of challenges would also increase, with around nine cases taken to court last year.
One of the major problems lies when a Will has been changed suddenly and often just before a death, removing the original beneficiaries and leaving all assets instead to a charitable organisation.
Relatives are left confused by this action and often argue that the deceased was obviously not of sound mind when they made the alteration.