AI Legalese Decoder: Simplifying Another Inheritance Post for Easy Understanding
- May 16, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Bereavement and Inheritance: Dealing with a Parent’s Estate
Hi All,
Unfortunately, I had a parent pass away recently, and I’m an only child about to receive their estate.
#### Estate Breakdown:
The estate includes a Freehold House in South Canterbury, with an estimated value of $480k, a Term Deposit of $50k, Cash totaling $90k, a Life Insurance Payout of $235k, and a Car valued at $4.5k. I have not yet incurred expenses for lawyers or the funeral.
#### Potential Plans for the House:
The house requires a new roof due to a leak, and I am contemplating keeping it as a long-term rental property for sentimental reasons.
#### Decision Making:
I am unsure about what steps to take regarding the inherited assets. Should I pay off the mortgage, consider property investment, or explore other options?
#### Personal Background:
I am a 30-year-old male earning 104k annually, with a mortgage of $600k in Selwyn shared with my partner (30F) who earns $80k. We are considering starting a family in the near future.
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****** just grabbed a
I’m so sorry for your loss, it’s super hard losing parents.
Personally I’d keep a chunk of cash to make sure you can keep the old house and bring it up to Healthy Homes standards so that it can be rented out.
I’d keep some funds for Mum or Dad to take a year off work when you start a family and enjoy the time with the baby.
I’d put a little bit of money aside and start a savings fund for the child when it arrives and for their future ie, house, wedding, OE etc and just give them the best financial start in life.
I’d allocate some funds for yourself to enjoy, I’m sure your parent would have wanted it. Buy a new car, take a holiday, do something that makes you smile!
The rest I’d pay down my lending with.
Gosh, sorry for your loss.
I would get some legal advice on what you need to do to avoid intermingling, or to at least to know what this is. (You may not want to avoid this.) For example, repaying relationship debt with inheritance funds could mean that these become relationship property that then gets divided if there is a separation.
So I would be using the cash to pay off part of the mortgage atleast. Whatever you can right now without incur a break fee.
Then if you decide to rent the inherited property out, I would look into transferring the balance of the mortgage (or as much as possible) over to the property for tax reasons. If you go down that route, you probably need to talk to an accountant about moving it into a company (although this will reset brightline, from July its only 2 years) so you can split the income between yourself and your partner.
That said are you sure you will be ok with your childhood home being a rental? E.g if its damaged are you going to be ok with it?
Put it in a trust, once you use it for anything else it becomes relationship property, therefore if you split with your partner she gets half of it.
If you haven’t received the proceeds, you should consider putting it all in a trust or getting a prenup if necessary or all of it will become relationship property.
Losing parents is hard – I’m sorry you’ve gone through this.
Personally I wouldn’t keep the house. Because it’s sentimental to you, I’m worried it will be a money-sink. A $480k painting that you wanted to keep for sentimental reasons would worry me less.
In terms of everything else, it’s hard to beat repaying your mortgage. If you want to invest in property then doing it as you approach finishing your mortgage will allow you to blast through the mortgage on the rental.
The downside of waiting is if property rises at least as fast as interest rates then you miss out on capital gains. That might happen, I just don’t like gambling.
This is especially true if you’re planning to have kids. A $600k mortgage is unaffordable on just your income, but take off $385k and you can afford to live on one income.
If you get a contracting out agreement which is highly advisable, you both need separate lawyers but it will be the best money you’ll ever spend.
If you did want to sell the house down the track it might incur brightline, also probably need to get it up to healthy homes spec (if it isn’t already)
Clear the mortgage. It is rather simple