7 Steps for Effectively Managing an Inheritance

Research shows that a majority of baby boomers will receive an inheritance at some time during the lives, with the average inheritance estimated at $65,000. If you are the beneficiary of a family inheritance, here are 7 steps you can take to be sure you manage it wisely:

1. Re-examine your financial goals. Look at short-term gains vs. long-term benefits. Determine the direction you want to go and then invest your inheritance accordingly.

2. Review your estate plan. If you inherit a significant amount of money, you should review your estate plan to determine what new strategies can be put into place to protect your increased assets. If you inherit a valuable collection of art or jewelry, you’ll want to look into other ways to protect that, too.

3. Get rid of debt. If your inheritance is significant enough to allow you to pay off debt – especially credit card debt or loans with high rates -consider paying it off entirely. You can evaluate whether or not this is a good idea by estimating what you currently pay in interest and then determine if investing your windfall will provide a better return.

4. Have an emergency stash. If you do not already ave at least six months’ worth of living expenses in an emergency fund, it’s a good idea to get that shored up now.

5. Take your time. Explore your options and consider the best use of your inheritance before making any major moves. Inheritances are separate marital property in California, so if you are headed for divorce, it may be more prudent to just put the cash in an interest-bearing account until the dust settles.

6. Consult a professional. A financial planner and an estate planner will help you navigate your new wealth and save money.

7. Give yourself a treat. Put aside a small amount by for something special for yourself but don’t go overboard.

We can further advise you of all your options as part of a comprehensive estate plan. If you would like to have a talk about estate planning for your family, call our office today to schedule a time for us to sit down and talk.

We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.