Inherited wealth from your deceased spouse?

 

Inherited wealth from your deceased spouse? Here’s how you must manage the money

When your spouse passes on, your mental state may get fragile. Avoid taking crucial money decisions in haste, especially on lending to someone you think might need financial help

About 20 years ago, Reshma was married to the man of her dreams, Sudhir. A perfect gentleman, he had a high-profile job and a lavish house in Bengaluru. Sudhir belonged to one of the super-rich families of Karnataka. They were literally living a splendid life.

Reshma and Sudhir were happily married, and were blessed with two beautiful daughters – Aarohi (18)  and Aarya (15). Reshma was indeed living a fairytale. Alas! Sudhir passed away a couple of years ago due to a sudden heart attack. Reshma was completely shattered due to Sudhir’s demise. To make matters worse, Reshma’s in-laws targeted her for their son’s loss. Reshma absolutely had no idea about their family’s finances or about the inheritance Sudhir had left for her and their daughters!

Her brother-in-law made her sign papers which resulted in her giving away her share of the inheritance.

Unfortunately, it was too late before she realized. This resulted in physical and financial assets being given away because of her ignorance about financial matters.

Though she wasn’t rendered penniless and still had some wealth, the big problem was the liquidity crunch that she faced at the time.

Her brother-in-law took charge of her finances assuming that Reshma wouldn’t interfere as she had no knowledge about these things. After six months of manipulation and underestimation, Reshma decided to take charge. She studied  and analysed her finances, started to make decisions on her own, about herself and her two daughters and their future.

We discussed in our last column on how you must ensure that your spouse and children are not stranded financially if something unfortunate were to happen to you. We even touched upon the documentary process that the surviving members need to adopt, without any delay.

But what happens if the person passes on and the surviving spouse is absolutely clueless about financial matters?

Take some time off and think

Sometimes, when a spouse leaves a large sum of money behind, there is a temptation to invest in a hurry. Or, worse, spend it as time passes by. That may not be such a good idea, after all.

Avoid impulsive purchases and investment decisions by barely listening to someone. Take your time, organize everything. For instance, if equity markets are rising the way they have been over the past many months, there could be a temptation to buy stocks at the earliest. Or worse, buy bitcoins since they’re the talk of the day.

Most importantly, do not make any financial commitments to family and friends.

Factor in your potential lifestyle changes

The loss of a family’s bread earner will automatically affect one’s lifestyle. In Reshma’s case, she had two growing daughters. Reshma had to pay for their higher education, save for their marriages and secure her life during old age. Reshma had to make arrangements for timely payment of her daughters’ education fees at periodic intervals.

Get professional help

It’s always better to seek professional help. As the heir to your spouse’s wealth, it’s not just a matter of where you would be investing all that money. Inheritance can be complex as it changes your tax structure, your income and even your financial goals. Your wealth mostly needs re-engineering. And you might need advice on legal, tax, and real estate matters, as well as in portfolio management.

 

With the right advice, you can maximize your wealth and make it last for as long as possible, for you and your children if they are still dependant on you. But do not trust your advisor with your eyes shut. Work with her, and understand what you need to do with your money. Your advisor can only recommend, but the final decision must always be yours.

Someday, you need to convert your inheritance into sustainable wealth. You need to have a clear understanding of your goals that you would like to accomplish with this wealth. Once you establish your goals, you can work on a plan.

Happy Investing

Source: Moneycontrol.com