Your Inheritance: Smart Strategies to Manage Your Money
There are several factors to account for when you receive your inheritance. Tax implications*, retirement savings, and passing along your assets to your spouse and/or loved ones are only the beginning. You will also need to consider how to manage and protect your newfound assets, as well as if you'd like to increase your charitable donations.
Here are some tips on how to handle your inheritance.
How Do I Get Advice on My Inheritance?
Working with an attorney* who specializes in estate planning alongside your financial advisor and tax professional* is a wise place to begin. Inheritances come in many forms, from property and businesses to cash and real estate. When you have a picture of what you'll be inheriting and how you'll be inheriting it, be sure to sit down for a consultation in order to create a strategy that's right for you.
It's important to know what you're inheriting — whether it's a trust, Individual Retirement Account (IRA), 401(k) plan, or perhaps even cash. For spouses who have inherited retirement accounts, distributions are usually taken during their lifetime or within the first five years after the original account holder has passed.
Keep in mind that it may take some time for inherited assets to come into your possession if being processed from an estate. It's typically the responsibility of the trustee or executor of the will to distribute the estate's assets.
How Do I Manage My Inheritance and Family?
There's no shame in wanting your family to enjoy the benefits of an inheritance. Speak with your financial professional about your inheritance and how it could be incorporated into your financial plan. You may be tempted to take a vacation or buy another home, but before that, think about contributing to your retirement or estate plan. Used properly, this inheritance could be a beneficial in helping you reach your financial goals ahead of schedule. Up-front planning may afford you the opportunity to have some well-earned fun in the future.
How Can I Plan to Increase My Gifts to Charities with My Inheritance?
An inheritance may allow you to further your charitable endeavors.
How Do I Protect My Inheritance?
Build a long-term partnership with an investment professional that can help you sort through investment options. Having a second set of eyes — a set that's solely interested in your financial well-being — can help you find the right options for you.
Also, keep in mind that your financial advisor can help you to see the big picture with regards to the impact your inheritance may have on your financial wellness.