What impact does an inheritance have on my current liabilities?
August 12, 2023 | 50,00 EUR | answered by Mia Widmann
Dear Estate Lawyer,
My name is Claudia Busse and I am facing an important decision that could significantly influence my life. My aunt recently passed away and surprisingly left me a considerable sum of money. Now I am worried about the impact this inheritance could have on my existing liabilities.
Some background information: I am single, work part-time, and live in a rented apartment. I have an ongoing loan for my car and I am a member of a gym, for which I pay monthly fees. Additionally, I have other ongoing obligations such as insurance and phone bills.
My goal is to make the best use of the inheritance to improve my financial situation and secure my future. However, I am unsure whether I should use it to settle my existing liabilities, or if there may be better ways to handle the inheritance.
Therefore, my question to you is: What impact does an inheritance have on my existing liabilities and how can I best use it to improve my financial situation? Are there any tax considerations or legal pitfalls that I should be aware of?
I thank you in advance for your support and valuable advice.
Sincerely,
Claudia Busse
Dear Mrs. Busse,
Thank you for your question and for trusting in my expertise as a lawyer specializing in inheritance law. It is understandable that you are concerned about the impact of the inheritance on your current liabilities and how you can best improve your financial situation. I will explain in detail the aspects you should consider.
First and foremost, it is important to know that an inheritance does not automatically lead to the settlement of your current liabilities. If you accept the inheritance as the heir, you step into the legal position of the deceased and take over their assets and debts. However, you have the option to disclaim the inheritance if you do not wish to take on the debts.
In your case, where you have inherited a substantial sum of money, it may be beneficial to accept the inheritance and use the money to settle your current liabilities. This would provide you with financial relief and allow you to reduce your monthly expenses.
It is important to consider the tax implications as well. In Germany, inheritance tax is generally applicable to inheritances, which can vary depending on the amount of the inheritance. Therefore, it is advisable to inform yourself early on about the tax consequences and possibly consult a tax advisor to optimize the use of the inheritance.
Furthermore, you should also consider any potential legal pitfalls. For example, creditors of the deceased may claim the inheritance to settle outstanding debts. In such a case, it is advisable to seek legal advice to protect your interests and minimize potential liability risks.
Overall, an inheritance can be a good opportunity to improve your financial situation, especially if you wish to settle current liabilities. However, it is important to thoroughly inform yourself and seek professional advice to make the most of the inheritance.
I hope that my explanations are helpful to you and I am available for any further questions you may have.
Sincerely,
Mia Widmann, Lawyer
