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Inherit Wealth

So you are getting a large lump sum of inherited wealth or have been informed you are getting one through the passage of a relative or family friend. What should you do?

For a lot of people, they may find themselves in this situation. The monies could be coming from older parents, an affluent aunt or uncle or a death benefit check from a life insurance policy from a grandparent. Financially speaking, this kind of windfall is often no different than winning the lottery or getting a big bonus at work. And in general, the statistics are not in the inheritors favor.

According to Texas Tech researcher, , more than half of the people who in inherit over $10,000 will have it spent in less than a year. That includes those who receive what could be life-changing lump sums. For those who inherit less than $10,000, watch out eBay, it’s considered spending cash.1 Your first step according a diverse set of commentators on this topic is to find a qualified financial advisor. Skilled advisors are trained to help you first clarify your short-term, intermediate-term and long-term goals. In understanding those goals you will be more likely to make decisions that are long-term beneficial than short-term feel-good.

The new found wealth can create a lot of opportunities for you that were not there before. The opportunities may include saving some of this money for your children’s college education, paying off some unsecured debt, saving more towards retirement or even buying a house. These, and many others, are all topics to discuss with an advisor. The goal should be to put you in a better financial situation then you were prior to inheriting the wealth. But, one should also be cautious about telling too many people about your inheritance. Too many times other people find out about your inheritance and now they may be asking you for some of the money to help them out. Most of these “family loans” can go unpaid and even affect your family relationships for year to come.

Inheriting wealth can be a great financial windfall for most, but like most opportunities, there are new risks as well. Work through your options and get informed what restrictions and risks come with your new windfall; your final decisions may impact you for a lifetime!

Questions to Consider:
  • Is this going to be a taxable event to me?
  • If I sell the inherited assets, what are the tax ramifications for doing so?
  • What is the fair market value of the assets inherited? Are there stipulations in the will or trust on how I can use or distribute the assets?
  • Do I need to take mandatory distributions from any of these accounts?
  • Can I just put these accounts into my own name?
  • If married and we plan our finances together, how will this affect my spouse and I?

Business Insider.com - Despite Good Intentions, Most People Wind Up Blowing Their Inheritance Anyway

Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Trilogy Capital, Inc., a Registered Investment Adviser. Trilogy Financial Services, Trilogy Capital, Inc. and NPC are separate and unrelated companies.