Receiving an Inheritance One Day? Here’s What to Do Now

Baby boomers are set to inherit up to $8.4 trillion over the next 15 years, according to The Center for Retirement Research at Boston College. And while receiving an inheritance can be exciting, there are complicated issues to be worked through, including transferring the emotional attachment you had with your parents to the assets they left behind for you.

A recent New York Times article which explored this issue found that some boomers tend to get “stuck” when deciding what to do with their inheritance, letting large sums languish in low interest accounts for years. Others use the windfall to open their lives up to new possibilities, like starting a business or even retiring.

Here are some tips on how boomers should plan for a future inheritance:

Create your own estate plan first. You may be expecting an inheritance, but no one knows what the future will bring so create your own estate plan first (this is especially critical if you have children of your own). Remember, part of your estate planning should also include a prospective plan for your future inheritance.

Do some tax planning. Inheritances can include cash, personal property, a valuable collection of some sort, investments or real estate, so the assets contained within your inheritance need to all be examined for potential tax liability.

Look to the future. Many boomers feel an obligation to protect and preserve the inheritance for their own children, while others may want to benefit charities or have other plans for what remains after they are gone. Your own estate plan should address ways to protect and pass on your assets in the most tax-advantaged way possible.

Use your inheritance. Financial experts advise that boomers should not just sit on an inheritance, but should explore ways they and their loved ones can best benefit from it. Inherited money should not be treated as a memorial; instead, use it as your parents no doubt intended it – as a way to make a better life for yourself and your family.

To learn more about putting the proper legal and financial protections in place for your family, contact our office to schedule a time for us to sit down and talk. We normally charge $750 for a Family Estate 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 626.355.4000 today and mention this article.