Guide to Inheriting A Property
Property Details
Passing on something to the next generation is what most humans do. They work hard every day for their offspring and then leave something behind someday. After all, a person can’t carry their properties to their grave. Without proper knowledge and good decision-making, it would all be all for nothing. If Inheriting a property is most likely inevitable, a person must prepare themselves when the day comes.
How to transfer title of inherited properties?
What if the parents’ passing is sudden and there is no will that they left behind? The heir then must file an Extra-Judicial Settlement of estate (EJS). What is EJS exactly? It just means that the heirs do not need to go to court to divide the inherited property. All they need to do is find a good lawyer and settle it among themselves.
Are there any taxes to pay?
We can’t escape taxes, and this is no exception. There is the Estate Tax Return (ETR) that is needed to file after. It must be settled then, with the tax bureau. They will issue a tax clearance, so don’t forget to get it.
How important is the Estate tax?
Estate tax serves as a gate between the heir and the inherited property. It makes the transfer of property official. For example, an heir didn’t pay their Estate tax and wants to sell the property. They cannot transfer the property to the buyer’s name. It’s because the heir hasn’t got the property on their names yet. Inheriting a house isn’t that easy after all.
Now you have officially inherited a property. What now? Here are five tips for managing your inheritance:
- Find and consult a tax and financial expert.
If you want to sell your inherited property after you got it, don’t do it right away. Consulting a tax and financial expert can help you plan your transactions carefully and smoothly.
- Consider depositing it in a bank.
Whenever people get a lot of money in their hands, the tendency is always to spend it all. Well, don’t. It is better to be in a bank or a brokerage account instead. If you are married, then think about it too. You can put it in a separate or the same account as your wife or husband. Nobody wishes for a divorce, but if it happens, inheritance is considered as separate property. It is not a separate property anymore if it’s on your joint account.
- Pay your debts with it.
Considering how life is just difficult sometimes, having debt is almost unavoidable. Inheriting a property is a way to get a lot of money in an instant. It is tempting to spend it on everything that you ever wanted. Don’t let the temptation get you. It is more important to live a debt-free life. It will save you a lot of stress and depression. It is a breath of fresh air once all those pesky debts are gone.
- Make more money out of it.
Depending on the location of the inherited house, it might be a good idea to make it a renting space. It will take a lot of work to make it that way but it is worth it. Passive income is not something that you should pass by. Inheriting a house is more helpful to us than we think it is.
- Don’t forget to treat yourself.
It is also important to treat ourselves sometimes. Ten percent of your total inheritances should be set aside for leisure. It is not a significant amount, and it should be enough for you to have fun. Just be wary that it doesn’t go beyond that. There are more things to prioritize other than leisure.
Inheriting a property can be both a satisfying and sad moment. It is appropriate that the heirs should manage it carefully. Inheritance is a good thing that can destroy or improve one’s life. It all depends on the person’s decisions on what it will be.
The Bottom Line: Make The Best Financial Decision For Your Family
Grieving the death of a loved one is hard enough, not to mention the financial responsibilities left behind. But having to balance these new duties with your grief can make it even more difficult to make the best decision.
If you’re struggling to find the best path forward, try to remove the emotions from your decision-making process. Regardless of how you decide, you should make sure your choice serves your financial needs first and foremost. Talk to your family members about finances so that everyone can be better prepared if something happens.
Still, have questions about your newly inherited property? Leave your thoughts in the comments below, and we’ll do our best to answer them. When dealing with houses and estates, we recommend consulting a lawyer or tax adviser for the best advice.