Receiving a sizeable inheritance can be a life-changing opportunity. However, it can also be a stressful and overwhelming process. For this reason, we recommend having a team of professionals, including an inheritance planner, help you navigate this process.
First, you need to consult a financial professional and tax professional. Depending on the type of inheritance, you may be liable for substantial federal/state taxes. A financial planner and tax professional can help you understand and plan for the tax implications associated with your inheritance.
Don’t Touch the Money
The best thing you can do after dealing with the tax implications is to deposit the money in a bank account and do not touch it. Don’t let emotional spending destroy this opportunity for you.
If you are married, you will need to decide whether to put the account in your name alone, or jointly with your spouse. In the event of divorce, inheritances are consider separate property. However, once it is put into a joint account, they are no longer protected.
Insurance and Estate Planning
If you have inherited a large portion of money, you should consider increasing your insurance coverage. If your inheritance included artwork, jewelry, or real estate, you would need to consider coverage for these items as well.
Having more to lose means you need more protection. Furthermore, you will need to think about estate planning. Yes, really. What should happen to your assets when you are deceased? Having a plan in place will ensure that your wishes are respected.
An inheritance may allow you to completely eliminate any debt that you have. First, consider your higher interest debts such as personal loans and credit cars. You might consider paying off your mortgage and car, but it may make more financial sense to invest the money rather than pay off low interest rate loans.
Then, you should create an emergency fund account with enough money to fund six months of your living expenses. This will help ensure financial stability and allow you to avoid future debt.
After you have taken care of taxes and debt, you now must decide what you will do with this money. It is important to set concise goals and have a clear plan outlined to help you achieve these goals.
This could include things such as funding your retirement account, setting up college funds for your children, investment accounts, making donations to charity, and more.
Something for Yourself
Now that you have taken care of business and laid out plans for the future, consider setting aside a small portion of the inheritance to spend on yourself. Buy a new car or take trip. Do something you enjoy.
Inheritance Planner in Northern Virginia
If you have come into an inheritance and you would like to make the most of this money, contact Argent Bridge Advisors today. Our financial advisors can guide your through this process and help you plan to meet your goals!