Inheriting assets can evoke mixed emotions. While the cause of the inheritance is the loss of someone close, the act signifies their wish to enrich your life as a testament to your bond. Here are some guidelines for handling such bequests with care and respect.
Before diving in, pause and reflect on your financial objectives. A common pitfall with inheritances is impulsively spending on fleeting desires. Utilizing the funds meaningfully not only benefits you but also pays homage to your loved one’s memory.
Recommended Steps:
– Reduce Liabilities: Use the inheritance to alleviate debts.
– Emergency Savings: Allocate funds for unforeseen circumstances.
– Empower Through Education: Consider investing in furthering your or a family member’s education.
– Retirement Security: Contribute to your retirement savings for a comfortable future.
– Future Education: Consider seeding or augmenting a college fund for your child.
Actions to Avoid:
– Keep It Low-key: Broadcasting your newfound wealth may attract those with ill intentions.
– Avoid Impulse Buys: Refrain from spending on non-essential items or experiences.
– Deliberate Decision-making: Avoid rushing into financial decisions.
– Beware of Schemes: Steer clear of too-good-to-be-true investment offers.
For those inheriting an IRA, consider adhering to the “required minimum distributions” stipulated by the Internal Revenue Code. This approach allows your inherited amount to maximize its tax-deferred growth. Moreover, revisit the account’s beneficiary designation. It will default to the existing contingent beneficiaries upon your demise if unaltered. Adjusting this ensures the inheritance goes to beneficiaries of your choice.
Lastly, introspect on how the inheritance reshapes your existing estate plan. The influx of funds might necessitate modifications to your planned bequests. For instance, if your assets doubled post-inheritance, would you still wish to allocate the same fixed amounts or percentages to your relatives or causes? Perhaps you’d be inclined to offer more generous contributions to nephews and nieces or adjust percentages to accommodate a charitable donation.
Engaging with the McGee Law Firm can guide you through these considerations, ensuring that you respect the legacy left behind and create impactful ripples with your inheritance.
From the desk of Attorney Brandon McGee
- When Estate Planning Documents Say One Thing—and Mean Another - August 12, 2026
- Will My Estate Be Subject to Estate Taxes? - August 5, 2026
- Celebrity Estate Planning: Tony Hsieh’s Estate Is Back in the News - July 29, 2026