On the list of problems you really wouldn’t mind having, receiving an unexpected windfall in the form of an inheritance may just be at the top. Unfortunately, without careful planning and management, this dream can turn into a nightmare — with your lucky jackpot dwindling away all too quickly.
Here’s how to protect, manage and maximize your lucky break.
1) Do your research. After you’ve taken time to catch your breath and start healing from your loss, set up a meeting with a trusted financial planner and your attorney. Why? Because the rules and regulations surrounding inherited retirement plans, homes and other investments are extremely complicated. It’s essential that you do your homework while paying full attention.
2) Sit down with your insurance and legal advisors to develop a carefully considered plan. Remember, you probably have far more assets now than ever before, and professional guidance can help you maximize your windfall.
3) Meet with your siblings and other important family members. Ensure that the assets are divided in a manner all can agree with, especially emphasizing fulfilling the wishes of the deceased.
4) Reconsider your own budget and determine changes in your fixed and variable costs. You should also reevaluate your own personal strategies; keep in mind that Mom’s investment plan may have worked well for her, but it may not be the best choice for your situation.
5) Beware of lurking taxes! While some inheritance types are tax-free, such as insurance payouts, others require you to pay federal and/or state estate taxes.
Remember, inheriting a windfall isn’t just about money — it’s also about change and transaction. Give yourself time — from a few months to a full year — to adjust to your new financial reality.
Click below to hear my chat with Win Damon on WNBP.com and FM radio 106.1 WNBP in Newburyport, MA.
Stuart Steinberg, CPA, MBA has been dealing with families and their money issues since 1988. He can be reached at 55 Pleasant Street Newburyport and at (978)864-9581 and stu@eaglerockwealth.net
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
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