Gregory Bright, Valdosta Today Financial Contributor
Our column, “The Bush Wealth Advantage” is our way of giving back to the community with all sorts of insights, relevant news, and practical wealth planning strategies.
How Does an Inheritance Change Your Financial Picture?
If you’re lucky enough to inherit money, you might wonder: how will an inheritance change my financial picture? For some, an inheritance could mean a drastic change in their finances. For others, inherited money might be a nice cushion against unexpected events.
If you do receive an inheritance, here are some tips to make the most of your loved one’s hard work:
Don’t blow it.
Think carefully about how you can best use the money to further your financial goals. That’s not to say that you can’t spend any of an inheritance, but it’s very important to act in a careful and considered way. Your inheritance could mean many things to your family: college for your children, an early retirement, a larger nest egg, or a legacy for your loved ones.
Take a step back.
Inheritances come in all shapes and sizes, and they can mean different things to your lifestyle and long-term financial picture. Take time to think about your situation and consider all of your options. If you share an inheritance with others, don’t rush into decisions based on someone else’s timeline.
Speak to a professional.
A financial professional who understands your personal situation can help you understand your options and show you how you can use your inheritance effectively. When multiple family members are involved, a neutral expert can help keep discussions on track and find solutions that benefit all parties.
Remember rules about inherited Individual Retirement Accounts.
Special rules apply when you inherit an IRA. If you inherit a Traditional or Roth IRA, speak to a qualified professional who can help you understand your options and obligations.
Don’t count your eggs before they hatch.
While you might be expecting an inheritance, there’s no guarantee that it will arrive. Most people receive inheritances upon the death of their parent or grandparent. With today’s elders living well into their 80s and 90s, they may end up spending down more of their assets than you anticipate. Rather than count on an inheritance to finance your lifestyle, make sure that you’re saving enough to thrive anyway.
Next Steps
Inheritances can be a wonderful opportunity to use a loved one’s legacy to improve your life. Some of our clients have used inheritances to shore up their retirement nest egg. Others have chosen to use the money to support their family’s values and remember their loves ones through a family vacation fund or a second home where relatives can congregate. The important thing is that they made decisions that were right for their situations.
If you have any questions about inheritances or want to discuss your personal financial situation, please let us know; we would be happy to help you find answers that work for you.
Greg is one of the three advisors with the Bush Wealth team and he leads our investment selection committee. Greg is responsible for providing comprehensive solutions during the planning process. His primary expertise is helping clients set and achieve goals before and after they retire. Greg lives in Valdosta with his wife Amanda and their son Greyson. You can submit questions about this article to gregory.bright@lpl.com.
Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. The opinion voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
