You’ve Inherited Money, Now What Should You Do?
By Net Worth Advisory Group
If you’ve received an inheritance, it’s likely you’ve been met with a mix of emotions, ranging from shock and overwhelm to hope and grief. While the sudden influx of money or assets can positively impact your financial situation, it may also serve as a reminder of the loved one you’ve lost.
Honoring your departed loved one by using your inherited money wisely is a meaningful gesture that can carry on their legacy. Yet in the midst of grief, it can be easy to overlook important details. Receiving an inheritance can oftentimes be a complex process, which is why seeking guidance from a trusted financial professional may support your decisions. Their experience and resources can help you understand the intricacies involved so you make optimal decisions for your future. Whether you’ve recently inherited or anticipate inherited money in the future, here are some key considerations to keep in mind.
Take a Moment
Before making any decisions about the money, you need to process the loss of your loved one. Failing to deal with your grief can result in emotional spending that compromises the money you’ve just received. If you give yourself some time, you may become more sensitive to your loved one’s wishes or have the chance to clear your head of complex emotions.
If your loved one spent their life building and protecting their wealth, they probably hoped you’d do the same. Letting your inheritance sit for a minute can help you overcome the initial temptation to splurge on something like a fancy vacation or expensive new home. If it’s important to you to honor their legacy, don’t forget to take care of your own emotions to safeguard the wealth they’ve gifted to you.
Understand the Type of Inheritance You’ve Received
Common types of inheritances include:
- A trust account or cash
- A retirement account such as an IRA or 401(k)
- A house or other property
Knowing and understanding the types of inheritance you’ve received impacts how you access the funds, any taxes associated with it, and what your options are moving forward.
For example, if you inherit a home but don’t want to live in it, you may need to learn more about potential capital gains taxes before deciding to sell the property. If you find that a capital gains tax would be too costly, you might explore another option, such as renting out the house or living in it temporarily as you assess your situation.
Likewise, inheriting a retirement account comes with its own set of considerations, particularly if you inherit the retirement account from a non-spouse. Regardless of the inheritance you receive, it’s best to contact a tax-planning or financial professional who understands the intricacies of inheritance situations.
Take Stock of Your Financial Situation
Once you understand the type of inheritance you’ve received, you’re better equipped to align your plans for the inheritance with your other financial goals, such as:
- Contributing to your retirement account
- Paying down your mortgage
- Saving for your children’s college education
- Giving to a charity or foundation you care about
- Buying a vacation home or taking your family on vacation
Partner With a Professional
When it comes to big financial decisions like dealing with an inheritance, seeking guidance from a professional is a choice that may increase the likelihood that your windfall will be carefully handled. A reliable financial advisor can offer unbiased advice and guide you to use your inheritance strategically to improve your financial well-being.
Here at Net Worth Advisory Group, we prioritize our clients’ financial goals and walk alongside you to instill clarity and confidence in your decisions. Our approach is centered on addressing your unique financial circumstances while making complex challenges more manageable. If you’re seeking a trustworthy advisor dedicated to your best interests, reach out to us today at 801-566-6639 or schedule a complimentary, no-obligation consultation. Let’s find out if we are a good fit to help you pursue your goals.
To learn more, visit our website.
About Net Worth Advisory Group
Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER™ and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.
As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.
Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.
.svg)
