By John Drachman
Regardless of size, any inheritance can seem like a bonanza. An inheritance can mean a better future to the beneficiary, reduced debt – or the successful achievement of personal or financial objectives.
In tandem with your inheritance, expect greetings from a swarm of far-flung associates with urgent funding requests. As you side-step those who view you as their personal gofundme.com prospect, commit to four simple steps to manage your inheritance like a champion.
- Park Your Inheritance. When asked by a wealthy merchant what skills he had, Siddhartha, in the book of the same name, said “I can wait and I can think.” For stoics and inheritors alike, waiting is especially critical at the beginning. If your benefactor was close to you, it’s natural to undergo a period of grieving where emotions take precedence over everything. Resolve not to spend any of the proceeds for two to three months by placing the asset(s) in a separate account. Keeping your money out of immediate reach will give you the time needed to work through emotions to consider your options more clearly.
- Think about Your Good Fortune. Consider how your inheritance took years or decades to grow as a way to honor your benefactor. Now the responsibility for managing those assets is yours. As Winston Churchill once said, “Let our advance worrying become advance thinking and planning.” By maintaining a sense of stewardship and accountability toward your inheritance, you’ll naturally think better and improve the odds that you will use the inheritance wisely.
- Write Down Your Priorities. The best way to begin exploring the options for your inheritance is by writing down your thoughts and wishes. Your choices will tend to fit within two categories: preserving financial security and improving your quality of life. Your inheritance lets you deploy new resources toward retirement or savings. Choose to pay-off some of your long-term debt or invest for other goals. Perhaps you need resources for a down payment on a new home or college payments plans. Starting a charity can also make sense. For example, you can avoid being subject to federal gift taxes if you:
- Gift $15,000 per person per year (if it’s a joint gift from you and your spouse, you can gift $30,000 per person) for the 2019 tax year.
- Give any amount to your spouse – or to a qualified charity.
- Ask for help. While overseeing your inheritance is your responsibility, you don’t have to undertake this alone. For many beneficiaries, partnering with a financial advisor is frequently the next logical step in a successful strategy. Validating your ideas with a financial advisor, improves the chances of making your hypothetical goals a reality. If you don’t have a financial plan, your inheritance can be the spark that leads you to create one.
Preserving, growing and enjoying your inheritance for many years to come are the ultimate objectives. After completing the four simple steps above, indulge in a little instant gratification. As stoics like Siddhartha and beneficiaries alike have known for millennia, newfound wealth is always savored best as a reward for goals completed.
John Drachman is a contributing writer to www.myperfectfinancialadvisor.com, the premier matchmaker between investors and advisors. John is an IABC award-winning writer, who applies his 30 years of financial marketing experience toward advancing the dialog between investors and investment professionals.
