What should you do when you receive an inheritance?

What should you do when you receive an inheritance? Receiving an inheritance can be life-changing, whether it provides greater financial security, an opportunity to invest for the future or even the means to start a business.

But what should you do when you receive an unexpected windfall and how quickly should you make decisions about it?

Our Head of Private Wealth & Tax, Jo Summers, recently spoke to the i paper for an article exploring how people have used inheritances to change their lives, and the considerations to bear in mind before deciding what to do with inherited wealth.

The article tells the story of Anna-Louise Stewart, who used a £5,000 inheritance from her great-uncle to help establish a soap-making business which now has an annual turnover of £100,000, with products stocked by retailers including Anthropologie and Rick Stein.

It also looks at the growing trend for ‘living inheritances’, where family members choose to pass wealth to the next generation during their lifetime, and explores some of the different ways recipients might use inherited money – from paying down debt and investing, to increasing pension savings or putting money towards property.

What should you do when you receive an inheritance?

Speaking to the i paper, Jo cautioned against feeling pressured to make immediate decisions after receiving an inheritance.

“One of the biggest mistakes people make after receiving an inheritance is feeling they have to make decisions straight away.

“Unless there is an urgent financial need, taking some time to reflect is often the best approach. An inheritance usually follows the loss of a loved one, which isn’t the ideal time to make major financial decisions.”

Taking stock of your wider financial position and considering your longer-term objectives can help ensure that an inheritance is used in a way that is appropriate for your circumstances.

The article also considers some of the inheritance tax implications associated with passing wealth between generations, including annual gifting allowances and the seven-year rule for lifetime gifts.

Read the full piece in the i paper: I turned a £5,000 inheritance into a £500,000 business – it changed my life.

Inheritance and estate planning advice

The right approach will depend on your individual circumstances, the value and nature of the inheritance, your existing assets and your longer-term plans. For larger or more complex estates, taking legal, tax and financial advice can help you understand the implications before making significant decisions.

Whether you are considering how best to pass wealth to the next generation or have received an inheritance yourself, the legal and tax implications can be complex.

Jurit’s Private Wealth & Tax team advises individuals and families on inheritance tax planning, lifetime gifting, wills, trusts, estate and succession planning and probate, helping clients structure and transfer wealth in a way that reflects their personal, family and financial objectives.

For advice on inheritance, estate planning or passing wealth to the next generation, contact Jo Summers or a member of Jurit’s Private Wealth & Tax team.