A large inheritance for some may be the largest sum of money for which they’ve been responsible. There can be considerable pressure to use those assets wisely or in the manner that their predecessor would have wanted. Here are some things you should think about to wisely put those assets to work, courtesy of The Times Standard Business in “Business Sense: Inheritance — At a loss for your recent gain?”
Your inheritance is likely due in some way to well-prepared estate planning. That said, it’s a good time to secure those assets so they continue on the path you want, in case you pass away before the assets are used. Ask a qualified estate planning attorney about a trust or will, and if you have an estate plan, a large inheritance is good motivation to review the documents to be certain it’s up-to-date.
If you have minor children, it’s essential that you create an estate plan. This is because children under 18 can’t legally take outright possession of assets. Talk to an estate planning attorney about trusts and wills, guardianship, powers of attorney and maybe maintaining separate property.
Be sure you have an adequate cash cushion for emergencies. This is usually three to six months of your expenses, depending on your situation.
A question of many recent inheritors is to whether or not they should either pay down debt or invest, and it really depends. Speak with your tax professional prior to putting a significant amount of your new funds towards your home loan or other major debts, because your money may be better off in an investment portfolio or tax-deferred retirement accounts.
When you have your estate planning, tax planning and emergency cash situation settled, you’ll have an idea of how much can be invested. How to invest is the next issue. You should work with a professional to discuss your specific circumstances.
Reference: (Eureka CA) Times Standard Business (September 30, 2017) “Business Sense: Inheritance — At a loss for your recent gain?”
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