What you need to know:
Imagine! You just learned of the passing of a loved one. During this stressful and emotionally taxing time, you also find out that you are receiving an inheritance
The demise of a loved one is one of the most devastating things. But and shortly after, the issue of inheritance arises which entails figuring-out how to handle or distribute the inheritance.
Imagine! You just learned of the passing of a loved one. During this stressful and emotionally taxing time, you also find out that you are receiving an inheritance.
Whereas you are grateful for the unexpected windfall, knowing what to do with an inheritance can bring its own share of stress.
The word inheritance is used to refer to the reception of genetic qualities by transmission from parent to offspring or the acquisition of a possession, condition, or trait from past generations.
There are varying sizes of inheritances with items ranging from property such as a car, antiques, land, housing, building, jewelry among other items and money.
Additionally, the definition of large inheritance too might vary. Some might consider the general rule of thumb where $100,000 or more is considered a large inheritance. Receiving such a substantial sum of money can feel intimidating, if you have never had to manage that kind of money.
Joselyn Bajjangala says her father passed away when she was barely 18 years and could not take on her father’s inheritance.
“When I lost my dad over 18 years ago, I could not inherit my father’s property due to the fact that in our culture (Buganda culture) a girl cannot become the heir,”Ms Bajjangala recounts.
She notes that everything was put into the hands of our cousin brother who became the caretaker of the property.
“Currently, the property is still in the hands of our cousin brother who keeps updating us as regards to the property,” she says.
Whereas Ms Bajjangala might have got a caretaker for the property, it might not be the case for others.
Others tend to inherit large trust funds and take sole ownership of family businesses. Some or most people might be termed as “young’’ and mournfully unprepared for such financial stands.
If you have not been a victim, you have heard of a friend who went bankrupt or worse just a few years down the road after receiving a life- altering sum of money.
Mr John Walugembe, executive director, Federation of Small and Medium Enterprises (FSMEs), says the challenge with large inheritance is it is a lot of money that you haven’t really worked for.
“Since it is a lot of money that you have not really worked for and it comes in suddenly; many people are tempted to spend the money in a very wasteful way. Depending on what the inheritance is and the source, take for instance you inherited a business, the cardinal role should be to ensure that that business continues to grow,”Walugembe explains.
Even if three or four people were asked to inherit a business, you should find a way of ensuring that the business keeps running. If you cannot corperate, you can get a manager to run that business on your behalf so that you just pick the profits.
In addition, you shouldn’t interfere in the business or try to take ownership or portion of the business because it will collapse.
“If you have inherited money, you need to re-invest it in away that will ensure that you earn from it because any way the money has come in suddenly you have not worked for it. So it is much easier to invest it because you can keep living the way you have been living; which also seems to be an issue with Ugandans inheritance,” Walugembe says.
He cites an example where in Uganda most of us inherit land. The challenge with land is that you want to split it and sell it too.
“If it is prime land, it would be good if all of you agree to have a project that you are going to use that land for so that you keep the value.”
Asked how children can be prepared to take on these large inheritances, Walugembe says, “Children should be part and parcel of our businesses. They should know how we earn money, they should know the difficulties in place because if they are not part and parcel of our struggle, they might look at it as a lottery and are more likely to waste and squander it.”
Managing large inheritance
Prosper magazine seeks to find out about inheritance and how best the beneficiaries can manage from a legal perspective.
Daisy Lynda Nabakooza, director supervision and market conduct, at Uganda Retirement Benefits Regulatory Authority (URBRA), defines inherited property as property bequeathed by a deceased person and whose legal ownership is transferred to an individual accordingly or property of a deceased person that is shared according to the provisions of the Succession Act (where a deceased person does not leave a will).
This will include inherited property that is later bequeathed to a third party. In case a person inherits a large inheritance, so much can be done with it.
“They need to establish the legal relationship they have with the property. Do they wholly own it? Do they jointly own it with another party? What are the legal conditions put in place by statute or by the person bequeathing it?” She asks.
Secondly, upon determining legal relationship, then the legal ownership of the inheritance must be effected within the confines of the law regarding the said relationship.
Thirdly, once a legal relationship is determined, then the person can use the property / inheritance as they deem fit within the legal confines of the established relationship.
This may include investment, development, disposal among others depending on the set conditions and wishes of the person from whom the property was inherited.
In addition, be mindful of statutory requirements like ground rent, taxes, annual returns, etc. and ensure you fulfill them as the deceased would have been required to fulfill them.