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I Received an Inheritance.  Now What Do I Do?

I Received an Inheritance. Now What Do I Do?

April 09, 2024

Receiving an inheritance can be a significant event in anyone's life. Whether it's a windfall of cash, property, investments, or sentimental possessions, an inheritance often comes with both emotional and practical considerations. While it can be tempting to immediately start planning how to use the newfound wealth, it's crucial to approach the situation with careful consideration and strategic planning. Here's a guide on what to do when you receive an inheritance.

  1. Take Time to Process

First and foremost, take a moment to process the emotions that come with inheriting assets from a loved one. Inheritance can be accompanied by feelings of loss, grief, guilt, or even relief, depending on the circumstances. Allow yourself the time and space to grieve and come to terms with the changes this inheritance may bring to your life.

  1. Understand the Assets

Before making any decisions, it's essential to fully understand the nature and value of the assets you've inherited. This may involve gathering information about bank accounts, investment portfolios, real estate properties, retirement accounts, life insurance policies, or any other assets included in the inheritance. Consider seeking professional assistance from a financial advisor, attorney, or accountant to help you navigate the complexities of the inherited assets.

  1. Review Legal and Tax Implications

Inheritances can have legal and tax implications that vary depending on your location and the nature of the assets received. Consult with professionals who can provide guidance on inheritance laws, estate taxes, income taxes, and any other legal considerations associated with your inheritance. Understanding these implications upfront can help you make informed decisions and avoid potential pitfalls in the future.

  1. Set Financial Goals

Once you have a clear picture of your inheritance and its implications, it's time to establish your financial goals. Consider your short-term and long-term financial needs, as well as any existing debts or obligations you may have. Determine whether you want to use the inheritance to pay off debt, invest for the future, purchase a home, fund education expenses, or fulfill other financial goals. Creating a plan will help you prioritize your objectives and make wise financial decisions.

  1. Develop a Financial Plan

With your goals in mind, work with a financial advisor to develop a comprehensive financial plan tailored to your unique circumstances. Your plan should address asset allocation, investment strategies, risk management, estate planning, and any other relevant financial matters. A well-crafted financial plan will provide you with guidance and peace of mind as you navigate the complexities of managing your inheritance.

  1. Consider Estate Planning

Inheriting assets may prompt you to revisit your own estate plan, especially if significant changes have occurred in your financial situation. Update your will, trust documents, beneficiary designations, and other estate planning tools to ensure that your wishes are properly documented, and your assets are distributed according to your intentions. Estate planning is an essential component of responsible financial management, and it's never too early to start planning for the future.

  1. Seek Professional Advice

Throughout the process of managing your inheritance, don't hesitate to seek advice from professionals who specialize in wealth management, tax planning, estate planning, and other relevant areas. Their expertise and guidance can help you make informed decisions and optimize the use of your inheritance for your financial well-being and legacy.

  1. Be Mindful of Lifestyle Changes

While an inheritance can provide financial security and opportunities, it's essential to be mindful of how lifestyle changes may impact your long-term financial health. Avoid making impulsive decisions or indulging in extravagant spending that could deplete your inheritance prematurely. Instead, focus on building sustainable wealth and maintaining a healthy balance between enjoying your newfound resources and preserving them for the future.

Receiving an inheritance can be a transformative experience that presents both opportunities and challenges. By approaching the situation with careful consideration, strategic planning, and professional guidance, you can make the most of your inheritance and lay the foundation for a secure financial future.

Remember to honor the memory of your loved one by using the inheritance wisely and thoughtfully, ensuring that their legacy lives on in the positive impact it has on your life and the lives of future generations.  If you find yourself in this situation and want to talk, feel free to reach out to me HERE.  As always, thanks for reading.  KB