According to the Bureau of Labor Statistics, around 30 percent of households can expect to receive a wealth transfer at some time within their life. On average, that wealth transfer, or inheritance, will account for around 40 percent of the person’s net worth. Knowing what to do with an inheritance once it is received can make a world of difference in both the short and long term.
“People are usually going through an emotional time when they receive the inheritance,” explains Brad Glickman, CERTIFIED FINANCIAL PLANNER TM Professional, and President of Bernard R. Wolfe & Associates, Inc., a company that specializes in offering wealth management strategies. “This can add to the confusion of what the best way to manage it may be. But it is important to try to make smart decisions with an inheritance so that it can assist you with your long-term financial planning.”
Here are a few tips for managing your inheritance:
· Don’t spread the news. When you get an inheritance, it is best not to announce to everyone that you received it, or at least how much it was. Others may feel left out or jealous, and siblings may even have received different amounts. Being discreet about it can help you avoid problems, as well as a rash of loan inquiries.
· Avoid sudden decisions. The grieving period is not the best time to make quick decisions about what to do with the money you have received. Have patience while the options are being considered.
· Consider taxes. What you choose to do with the inheritance can impact your taxes, including what tax bracket you will be in. Speak with an accountant about taxes if you have questions in this area.
· Forget checking. To avoid haphazardly spending the money, don’t stick it in your checking account. That makes it easy to keep spending it. Instead, stick it into savings until you have determined your next move.
· Think long-term. Most people do not have their retirement savings where they want them to be. Making decisions with the inheritance that will help with retirement would therefore be a smart move.
· Speak with a pro. The best way to ensure that you get the most out of the inheritance and make well-planned decisions with it is to speak with a certified financial planner. They can evaluate your situation, suggest options, and help you meet your long-term goals.
“Receiving an inheritance can be quite helpful, if you know what to do with it,” added Glickman. “By making well-thought-out decisions about it, there is a good chance you will be able to go on and leave an inheritance for others, as well.”
Bernard R. Wolfe & Associates, Inc., has provided financial management strategies and investment services since 1981. They assist a wide range of private and corporate clients with everything from estate planning and investment to divorce planning. The company also offers professional women’s financial planning services, led by Samantha Fraelich-Rohe, a CERTIFIED FINANCIAL PLANNER TM Professional.
To learn more about Bernard R. Wolfe & Associates, Inc., visit the website at www.bernardwolfe.com.
Securities and Investment Advisory Services offered through NFP Securities, Inc. Member FINRA/SIPC.