Inheritance management planning tips

When a loved one or cherished friend dies, you may receive an inheritance. Receiving an inheritance at such an emotional time can be overwhelming, compounded by the pain of losing someone close to you. 

It’s crucial to act slowly and consider the impact the inheritance can have on your current financial situation. Many people make the mistake of going through their inheritances immediately without understanding what they gave up in the long-term. First and foremost, take some time to figure out how this money can fit into your long-term goals such as paying down debt, saving for education or retirement, or as investments.

Whether the amount of your inheritance is modest and uncomplicated or it’s substantial and complex, the process of managing it doesn’t have to be overwhelming.  There are steps to take to help navigate the ins and outs of not only managing your financial windfall, but establishing your own legacy.

The right steps to take

An inheritance can be a source of stress, and, if mismanaged, could leave your financial situation unchanged or even damaged by racking up more debt. Take some time to step back and evaluate your options before making any decisions. 

You may want to consider temporarily placing any new assets that you have acquired in a high-yield savings account, CD, or money market account. Seriously consider getting advice from a reputable financial planner. There are many factors to consider upon receiving an inheritance:

  • What are the short- and long-term implications for taxes
  • What paperwork needs to be completed to transfer assets into your name
  • What legal documents do you need in place before you can receive your inheritance

Depending on the size and scope of your inheritance, you may also want to consult with other experts such as tax attorney, financial advisor, and/or estate planning attorney. 

What are the next steps to take in the process of managing your inheritance?

  • Learning about your new assets
  • Factoring in the tax implications surrounding your inheritance
  • Revisiting your financial needs and financial goals
  • Reviewing and reevaluating your property and casualty insurance
  • Updating your estate plan

If you don’t already have one, it’s time to create your estate plan.

Creating your own estate plan with the inheritance

Receiving an inheritance can provide you with the opportunity to set up your own financial legacy by establishing an estate plan or updating the one that’s already in place. A comprehensive estate plan which includes a will and a living trust can protect your wealth for future generations by helping to minimize federal and state estate taxes for your heirs.

Not just a living trust attorney, our experienced team can answer all your questions about planning for the unexpected and the future of your loved ones. Common questions like Does a Living Trust allow me to keep control of my property and what assets should not be in a trust.