There are many different events that affect us throughout our lives. One of the most heart-breaking is death. As we live our lives, it is likely that at some point we will either receive an inheritance or know someone that does. It can be a stressful time as you are trying to manage your emotions along side managing financial decisions. What do you want to do with the money? And what should you do first? Below are a few things to consider:

  • Grief. Grieving is a natural part of the process of the passing of a loved one. It is a crucial step before any major financial decisions are to be made.
  • Consider emotional, spiritual, or practical uses for the inheritance. There are many ways to honor a loved one. You could utilize the inheritance in a way that they would see fit for themselves, in a way that makes you happy, or in a way that unites both ways and establishes a connection with them. An example of this would be to purchase something small, that reminds you of the person that was lost.
  • Once you have come to an agreement with yourself in terms of basic ideas of how you would like to utilize the inheritance, it is time to start really planning out the angles of how to manage the funds that are not always clear as day for non-financial folk. The boring stuff – and the stuff that can have an immense impact on an inheritance and the way you choose to take / use it. This includes tax planning, estate planning, investment and spending options. There may be options available to you that you do not realize. (lump sum vs. annuity; selling real estate vs. utilizing it for income etc.)
  • Once you are ready to take these steps, it can be crucial that you work with a fee-only, fiduciary advisor to assist you. With them it is important to discuss:
    • Tax Implications
    • Distribution Strategies
    • Gifting Strategies (if charitably inclined you can possibly lower the tax liability)
    • Estate Planning
    • Insurance (insurance coverage should match your level of net worth/item value)
    • Annuitization / Income strategies to manage & create a reliable cash flow system
    • Debt management
    • Investing, Investing, Investing!

As mentioned above, it is a great idea to work with a Fiduciary, that has no conflict of interest in any area they advise on. This is not only helpful when you are stricken with a windfall from inheritance sums, but at other times and parts of your life. It is always good to take a moment and reflect on what you wish to accomplish with your money, and to make sure your advisor knows your goals as well. Working with your advisor closely to achieve your goals ensures the fastest and easiest approach to your financial and personal freedom.