If you are a baby boomer, it is likely that you already have or will receive an inheritance in the future. Research shows that the average inheritance is nearly $65,000, not to mention other assets. Have you prepared to manage this windfall wisely? Here are seven vital actions you must take to ensure your family’s largesse doesn’t go to waste.
- Revise your financial goals. Your circumstances have changed, so it’s time to give new direction to your investments. Will you use the inheritance as easy spending money, or keep it for a rainy day?
- Review your estate plan. Like the above, your good fortune should be reflected in your estate plan, especially if that fortune is large enough to merit additional asset protection. Have you inherited a valuable collection of art, jewelry, or postage stamps? There are steps you can take to ensure these are protected, as well.
- Rid yourself of debt. Don’t underestimate the opportunity of paying off your existing debt with an inheritance–credit card debt and high interest rate loans often should take precedence. Work out exactly how much you are paying in interest and compare with the potential return of investment.
- Relish the rainy days. It is always a good idea to have at least six months’ worth of living expenses at hand. If you haven’t already made this emergency stash, consider using an inheritance to make it a reality.
- Reexamine your circumstances. Are there any big changes to your life looming in the road ahead? It can be important to carefully determine where you are and where you are going before you take action on an inheritance. For example, a divorce poses certain challenges–an inheritance amounts to separate marital property but only if it isn’t commingled with marital assets, so it may well be in your best interest to place the cash in an interest-bearing account solely in your name until the dust settles.
- Retain a professional. Unsure what circumstances should spur what action? Consider consulting someone with years of experience in the matter; both a financial planner and an estate planner can be your guides to handling your new wealth.
- Reward yourself. Admit it: you deserve a little special something. Allot a small amount for something frivolous and enjoy it–just take care not to go to far!
An experienced estate planning attorney can further advise you of all your options as part of a comprehensive estate plan. If you would like to have a talk about estate planning for your family, call our office today at (612) 206-3701 or fill out our contact form to schedule a time for us to sit down and talk.
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