Managing your Inheritance Responsibly

June 13, 2023 HoganTaylor

Receiving a sizable inheritance can be a significant event in your life, and it's important to handle it responsibly. Here are some steps to consider when managing your newfound wealth:

Reflect and seek advice:

Take time to reflect on the inheritance and how it fits into your overall financial situation. Consult with a team of trusted advisors, including an attorney, accountant, and financial advisor, to help you understand the implications and make informed decisions.


Park the funds temporarily:

While you're in the planning phase, it's wise to park the cash or investments in a bank or brokerage account. Consider holding the assets in an account in your name only, especially if you're married, to maintain their separate property status in the event of a divorce.


Avoid impulsive decisions:

Until you have a clear understanding of the final settlement from the estate, refrain from making any major financial commitments or spending based on the inheritance. Be patient and wait for the estate administration process to conclude.


Understand tax implications:

While inheritances are generally not subject to income tax, the types of assets you inherit can have an impact on your tax situation going forward. Be aware of potential tax consequences, especially for income-producing assets, and consult with a tax professional to understand the long-term tax implications.


Review your financial plan:

Rather than treating the inheritance separately, integrate it into your existing financial plan. Consider using a portion of the inheritance to pay off high-interest debt or build an emergency fund. Incorporate the remaining assets into your overall financial goals, such as retirement planning, education funding, or other objectives.


Estate planning considerations:

If the inheritance significantly increases the value of your estate, it may have implications for your estate plan. Consult with your advisor to determine if any adjustments are needed to mitigate estate taxes and ensure your wealth is preserved for future generations.

Remember, it's essential to have a well-thought-out plan for managing your inheritance. While it's okay to indulge in a small splurge, responsible handling of the funds can provide long-term financial security and help you achieve your goals. Consider seeking professional guidance to make informed decisions that align with your financial objectives.


HoganTaylor Estate Planning Services

HoganTaylor estate planning professionals leverage their tax and business advisory expertise to help individuals accomplish goals and minimize tax burden. If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Estate Planning services, please contact Dan Bomhoff, Estate Planning  Lead.

Talk To An Expert

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.

Share This: