The death of a parent is a life changer. On top of the emotional turmoil that comes with such a major loss, there may well be an inheritance to deal with. Whether it's large or small, such a windfall offers numerous opportunities for adult children, such as paying down debt, financing a retirement or pursuing new interests.
An inheritance is a bittersweet thing to receive. It means that a loved one has died. It's also their last gift to you and often a gift of great potential. How, then, do you make the best of an inheritance? Making the best of an inheritance begins with recognizing the gift and its potential as something worthy of careful consideration. For some thoughtful counsel, consider reading a recent Kiplinger article titled “Heirs Should Treat Windfall With Special Care.”
When someone you love die and leaves you with an inheritance, there are issues that must be addressed but nothing that must be accomplished immediately and certainly not everything must be completed all at once. For example, you might begin the process by asking yourself some questions worthy of the gift and worthy of reflection. How was the inheritance received? What is the form of the inheritance, cash or illiquid assets? Are there any limitations or restrictions regarding the inheritance? In addition to these questions, determine whether the inheritance must be protected and preserved. For instance, is personal liability or property insurance required? Will a new account need to be opened, especially if the inheritance is to continue in trust? Should the assets themselves be repositioned or restructured? Will you be passing them along as well?
Families need not wait until the windfall itself to consider their options and their future. Part of estate planning is doing what is best for the next generations. Consequently, that fact alone may require working with them from the beginning, and well before the gift, to ensure all is in place and aligned when needed.
If you are planning for your own estate, how would you want your loved ones to treat their inheritance? A little bit of planning on your part in coordination with your loved ones can keep the family strong in the process, too.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning
Reference: Kiplinger (February 2014) “Heirs Should Treat Windfall With Special Care”