29 Aug What You Need to Know about Receiving an Inheritance
By: Barry E. Haimo, Esq.
August 29, 2019
What You Need to Know about Receiving an Inheritance
About one-third of American citizens can expect to receive a sizeable inheritance in their lives. If you are among these lucky individuals, congratulations! Inherited property, assets, or cash have many benefits – most of which can change a person’s life for good.
Unfortunately, a third of those people who receive an inheritance will lose it all within two years due to careless investments and overspending. That’s bad both for the beneficiary and the person bequeathing the inheritance.
If you’re the latter individual in this scenario, know that you can mitigate the risk of your beneficiaries losing their inheritance by engaging in proper planning with a knowledgeable Florida estate planning attorney. Get in touch with one you trust today to learn what tools you have available to you do protect your legacy – and your beneficiaries’ future.
But let’s say it’s too late for that. Your loved one has passed on and you have received an inheritance with no strings attached. You’re grateful, and you don’t want to squander it by making financially painful mistakes.
Before you rush into any decisions about what to do with your inheritance, consider the following four points. They will help you protect and preserve your inheritance.
Take Time to Think Through Your Decisions
Most inheritances come at a time when the beneficiary is experiencing a great personal loss. It’s thus possible that during such a time, emotions are running high and you might not be thinking clearly.
Consequently, if you’re receiving an inheritance, you shouldn’t rush into making huge life decisions. Like buying a luxurious vehicle. Or quitting your job.
Wait until you are emotionally ready. This may require that you commit some significant amount of time to self-care, which might involve counseling, spiritual support, meditation, or something else altogether – whatever works for you.
Seek Professional Financial Advice
Most people tend to get more excited about the different ways they’ll be spending their inheritance than what tax consequences there might be. Unfortunately, the sad truth is that if you are given a large inheritance, it will likely come with complex tax repercussions. Start spending before you fully understand these and it could easily run your tax bill very high.
It’s not only tax issues that require you to seek financial counsel, either. Generally, it’s wise to work closely with a professional such as an estate planning attorney to help you determine how you can reap maximum benefits from your inheritance.
Understand the Exact Nature of Your Inheritance
Does your inheritance come with any restrictions? Are the assets bequeathed to you outright or through a trustee? Will the money gifted to you be released in installments or a lump sum? Is your inheritance subject to a state inheritance tax?
These are just a few examples of the very important aspects that one should know about their inheritance. An estate planning attorney can assist you in understanding the precise nature of your inheritance.
Update Your Estate Plan
When you get an inheritance, your asset level and mix changes. Consequently, you should review your personal estate plan and update it to reflect your newly-acquired assets. This way, your estate will be fully protected for your loved ones.
A Knowledgeable Florida Estate Planning Attorney Can Help
There’s always a lingering difficulty that lies in deciding how best to utilize an inheritance to achieve both short- and long-term goals. Heirs will also encounter several pitfalls that could ruin their inheritance.
That notwithstanding, inheritances provide an excellent opportunity to improve your life – and the lives of your loved ones. Talk to us today to find out how you can use your inheritance to advance your financial goals while safeguarding and preserving your wealth for your descendants.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
YOU ARE NOT OUR CLIENT UNLESS WE EXECUTE A WRITTEN AGREEMENT TO THAT EFFECT. MOREOVER, THE INFORMATION CONTAINED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. EACH SITUATION IS HIGHLY FACT SPECIFIC AND EXCEPTIONS OFTEN EXIST TO GENERAL RULES. DO NOT RELY ON THIS INFORMATION, AS A CONSULTATION TO UNDERSTAND THE FACTS AND THE CLIENT’S NEEDS AND GOALS IS NECESSARY. ULTIMATELY WE MUST BE RETAINED TO PROVIDE LEGAL ADVICE AND REPRESENTATION. THIS INFORMATION IS PROVIDED AS A COURTESY AND, ACCORDINGLY, DOES NOT CONSTITUTE LEGAL ADVICE.