After the death of a loved one, grieving is a process that simply can’t be rushed especially if that death means a very different future from the one you planned. Death is never easy even after a long illness; it takes time.
Receiving an inheritance can inspire mixed emotions. Often an inheritance can change your life for the better. However, if you are grieving, it may be hard to move forward with plans for your future and that means financial planning as well. Wait until you’re ready. At that point, you’ll be ready to look at these Do’s and Don’ts guidance in order to make wise and informed decisions.
What not to do with an inheritance
There’s no rush. Don't go nuts and spend every dollar immediately. Don't invest in long term or risky projects. Be patient.
Don't pay too much in taxes. Work with an estate planning attorney so you pay the appropriate amount to the IRS.
Don't pay off the mortgage. Although this can be emotionally fulfilling, it may not be the best use of your money. Take advantage of today's low interest rates and the tax-advantaged deductible mortgage payments. Create a financial plan so that you don’t run out of retirement funds.
Don't go on a mad spending spree. Self-explanatory.
Don't be pressured. Don’t be surprised if many people suddenly come out of the woodwork to offer their unsolicited advice—relatives, old pals, insurance agents, bankers and investment advisers. Just say, "No, I am not ready to make a decision yet." Likewise, don't get pressured into sharing your money with a friend or family member.
What to do with an inheritance
Save it. Deposit the money in the bank, a money market account or a short-term CD.
Pay off debt. Get rid of credit card balances and other high-interest debts that don't have tax benefits.
Do some financial planning. Figure out your long-range financial plan before spending any of this new found wealth and make plans for your retirement.
Update your estate plan. Make sure that your estate plan is up-to-date so your assets go to the intended persons, and you don’t waste it on probate fees and unnecessary taxes.
Hire an attorney. Your estate plan is important, so be certain it is drafted by a qualified attorney and regularly update your plan to keep current with your situation and changes in the economy and the law. We made it easy to book your complimentary consultation – just call 757.259.0707 or 'request a consultation' online.
Reference: Reading (PA) Eagle Business Weekly (January 17, 2017) “Office Space: What to do and what not to do with your inheritance”