Managing an inheritance can be intimidating and challenging.
Receiving an inheritance can be a significant financial blessing.
Unfortunately, it comes with great personal loss.
In the midst of grieving a loved one, it is difficult to make sound decisions.
According to a recent Motley Fool article titled “5 Considerations for Managing an Inheritance,” making financial decisions too quickly can cost you in the future.
What can you do to prevent making mistakes with your inheritance?
Organize your thoughts.
You have lost someone dear to you.
Grieving is a process.
You may feel the need to act immediately with your inheritance.
Do something. Do anything.
Resist this urge.
Wait to take action with your inherited assets.
When you do choose to take action, discuss your options and goals with the executor of the estate and your financial advisor.
If you do not have a financial advisor, ask your estate planning attorney for a referral.
Create a plan then take action.
In some instances, you may be the executor.
If this is the case, you need to inventory assets within the estate.
If you are not the executor, you may still be able to help with this task.
Assets with beneficiaries designations and without beneficiary designations should be listed.
If the decedent was subscribed to services like cable and electric, these will need to be canceled.
An inheritance cannot be distributed until the debts have been paid.
Integrate to avoid mental accounting.
After you have received you inheritance, you will want to include it in your own financial planning.
You can treat this inheritance as earned income.
What should you do if you do not have a financial plan?
Meet with an experienced financial planner regarding your windfall.
Make sure you meet your financial priorities.
An inheritance will change your net worth.
This gives you an opportunity to pay your debts completely, create an emergency find, and continue to your retirement plan.
What should you do if you inherit art or an automobile?
You could sell them or keep them?
If another heir wants the asset, you could make a trade.
If you like the item but to do not have use for it right now, you can lend it to another family member.
By following these steps, you will be able to best honor the memory of your loved one through the thoughtful stewardship of your inheritance.
Reference: Motley Fool (Aug. 8, 20020) “5 Considerations for Managing an Inheritance”