“I’ve just received an inheritance. What should I do with it?”
That’s a question we’ve heard more than once lately, and it’s an important one. As more people find themselves inheriting money or assets from a parent or loved one, it’s natural to feel unsure about the next steps.
Inheritances can bring a mix of emotions, including gratitude, uncertainty, and even stress. This is especially true when it comes to making financial decisions. While every situation is different, here are a few helpful reminders if you find yourself in this position:
1. Know where the inheritance is coming from.
Is it cash? Proceeds from the sale of real estate? Stocks or other investments? Annuities? IRA? 401(k)? Often, an inheritance includes a variety of assets. Knowing where the money is coming from matters—for both tax reasons and organizing your finances. A great first step is to make a list of all the inherited assets.
2. Understand how it affects your financial picture.
Inheritances can be simple, or they can be complex. It depends on what you’ve received and how it fits into your current life and finances. A financial advisor can help you make sense of your options and create a strategy that works for you. Remember: what worked for a friend or neighbor might not be right for you.
3. Make a plan for how to use the inheritance.
Whether you choose to save, invest, pay off debt, or something else entirely, it’s important to have a plan. Your financial goals are unique, and so is the best way to use your inheritance.
If we can ever help you navigate your finances, including questions about an inheritance, we’d love to hear from you! As always, please consult with a tax professional or legal professional for tax or legal advice.