June 13, 2024
Inheriting an estate can feel like a double-edged sword—on one hand, it’s a valuable asset, and on the other, it often comes with legal, financial, and emotional complexities. For entrepreneurs, however, an inherited estate can also present an opportunity to build long-term value, generate income, or launch a business venture. Careful planning and strategic decision-making are essential to make the most of such a situation.
Here, we’ll explore how to unlock the entrepreneurial potential of an inherited estate, from managing probate processes to leveraging assets for business growth.
The probate process, which verifies the validity of a will and distributes the deceased’s assets, can be both time-consuming and complex. Entrepreneurs should aim to streamline this process to free up assets for productive use as quickly as possible.
Gather all necessary documentation, including the will, property deeds, and financial statements. Missing documents can cause delays, so thorough preparation is key.
Some assets, like joint accounts or life insurance policies with named beneficiaries, bypass probate. Understanding which assets are immediately available can help in financial planning.
Whether it’s a probate attorney or an estate planner, professional guidance ensures you avoid mistakes that could delay or complicate the process.
An inherited estate often includes tangible assets such as property, vehicles, or art and intangible assets like intellectual property or business interests. Entrepreneurs can maximise these assets through careful assessment and strategic action.
Real estate is often the most valuable component of an inheritance. Options for maximising its value include:
If the property is in good condition, consider turning it into a rental property to generate consistent cash flow.
A modest investment in repairs or upgrades can significantly increase a property's resale value.
Entrepreneurs may explore an equity loan to fund business expansions or startups if the property has significant equity.
For inherited intellectual property or business stakes, entrepreneurs should:
Determine whether the intellectual property or business interest has commercial viability. For instance, a patent or trademark could be licensed for royalties.
Engage experts to value these assets to ensure they are leveraged appropriately and accurately.
Cash or stocks inherited can be reinvested strategically to grow wealth. Options include:
Allocate funds into a mix of stable and high-growth investments.
Use the liquidity to fund ventures that align with your expertise and market demand.
Entrepreneurs must also consider tax implications associated with inherited estates. These include estate, inheritance, or capital gains taxes when selling assets. Proactive planning can minimise these costs:
Know the distinctions between estate and inheritance taxes and how they apply to your situation.
Certain expenses for managing the estate or launching a business might be tax-deductible. Consult a tax advisor to optimise your approach.
To sell inherited assets like property or art, consider strategies to minimise capital gains tax, such as timing the sale or reinvesting proceeds.
Inheriting an estate can also be the foundation for building a long-term legacy. Here are some entrepreneurial opportunities to consider:
If the estate includes valuable land or commercial property, it could be used as the base for a new business. Depending on market needs, examples include opening a retail space, a coworking hub, or even a boutique hotel.
Modernising operations or expanding offerings can ensure sustainability and growth for family businesses passed down through inheritance. Entrepreneurs should:
Conduct a SWOT analysis to identify strengths and opportunities for improvement.
Develop a business plan to adapt the company to current market trends.
While the entrepreneurial possibilities of an inheritance are vast, there are also potential pitfalls to avoid:
While using equity or liquid assets for business ventures can be beneficial, over-leveraging could lead to financial instability. Evaluate risks thoroughly before committing.
Inheriting assets from a loved one can be emotionally charged—balance business decisions with respect for sentimental value.
Take the time to fully assess all options and implications before taking action.
For entrepreneurs facing immediate financial needs, inheritance advances can be helpful. These allow beneficiaries to access a portion of their inheritance before probate concludes, providing funds to cover urgent expenses or invest in time-sensitive opportunities. While unsuitable for every situation, an inheritance advance can help entrepreneurs stay agile and proactive.
An inherited estate is more than just a financial windfall—an opportunity to create lasting value. With careful planning, strategic asset management, and an entrepreneurial mindset, you can transform your inheritance into a foundation for personal and professional growth. Whether through launching a business, growing existing ventures, or building a diversified portfolio, the key lies in leveraging your assets wisely while navigating the complexities of probate and taxes.
By approaching the process with foresight and discipline, you can turn your inheritance into a legacy of innovation and success.
