Receiving a monetary inheritance from a loved one who has passed away can be a tremendous help in wiping out old debt or creating a nest egg. However, there are estate administration and probate rules in Florida that govern how the money is to be transferred and what can be taxable after the inheritance. Making the wrong financial decisions regarding an inheritance could quickly cause undue stress and unnecessary costs.
The first step in getting an inheritance settled is to speak with the executor of the estate. They should be able to explain how money and property will be divided and the process by which the transfers will take place. If there is any disagreement in how much is to be transferred or about the process of transferring, it would be advisable to speak to an attorney to help sort things out.
It is important to understand the taxable nature of an inheritance. In most cases, the money inherited will not be taxable. However, if any money is made from the inheritance, it would result in taxes owed. For example, depositing money from the inheritance into a bank account would not be taxable, but the interest earned would be.
Once the funds have been received, decisions will need to be made on what to do with the money. If there is existing debt such as high-interest credit cards or student loans, this would be a good opportunity for a financial fresh start. Heirs should pay off the entire debt in full and consider saving whatever is left to prevent the need for using credit cards or taking out loans in the future.
Because every inheritance situation is different, there are complex probate rules that can be difficult to navigate without help. An attorney experienced in estate administration, probate and asset distribution may help make the process of probate easier and assist in making good investment decisions with this newly found money.