Preserving an Inheritance

A sudden inheritance can catch you off guard. One minute your life is status quo; the next minute, you have additional assets to plan for. While it may be tempting to spend your windfall, take a step back. Reckless spending has decimated many an inheritance, so sit down with your financial professional to develop a plan for managing and preserving your wealth. Here are a few ideas to get started.

Stash the cash in a money market account or other short-term investment until you have a plan in place.

Create a saving and investment plan. If you don’t have an emergency fund with 6-to-12 months of living expenses, start there. Invest extra money in investment vehicles that reflect your time frame and risk tolerance.

Pay off personal loans and high-interest-rate credit card debt, and don’t run up new debt.

Plan a legacy that leaves wealth to your loved ones or to charity. Federal estate tax applies to estates worth more than $11.7 million ($23.4 million for married couples).* An estate planning attorney can help you navigate the options to minimize any tax bite.

Splurge a little. Setting aside some money to spend on yourself can keep you from feeling deprived.

*https://www.irs.gov/businesses/small-businesses-self-employed/estate tax#:~:text=and%20%2411%2C700%2C000%20in%202021