Inheritance tips to keep your financial advantage

Experts offer tips on how to navigate the commplicated legal issues surrounding inheritance taxes.

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Dealing with an inheritance, whether expected or not, is never easy when it accompanies the death of a loved one. But financial planning experts warn heirs and beneficiaries to keep a few thoughts in mind as they start to move forward.

Take your time

"It can be more difficult to have mental and emotional clarity during the grieving process," says Vince Truong, a certified financial planner. "This process can be complicated if there are other family members or persons who are co-heirs." It is, therefore, important to take time making decisions. It may also be worth meeting an objective, trustworthy expert "who focuses on advice, and not commission, to help work through emotionally charged issues".

Gauge your risk tolerance

Some beneficiaries these days still receive a stock portfolio, which is far more liquid than a house. But investors should carefully consider whether they want to make any changes to those stock holdings by reallocating or selling them off "as the holdings may not match [an investor's] goals or risk tolerance", Mr Truong says.

Check property taxes if you sell ...

Some beneficiaries in the UAE receive a home as a form of inheritance, which they may later sell. But "many countries tax sales of property even if you have lived in the UAE for a number of years", says Andrew Landin, the managing director of Expat US Tax. "It's important to realise that if you receive a home via an inheritance, when you come to sell it you may have a tax liability in that country."

... Or if you rent

"If you rent out the property, you may have to file tax returns to report the rental income," says Mr Landin. "No one will tell you that you need to do this, but the tax authorities will come down hard on you if you fail to comply with the rules."