Managing an Inheritance

Inheriting wealth can be a burden and a blessing. Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if it comes to pass.

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so consider speaking with a legal or tax professional before making any decisions with an inheritance.

Tips for Managing an Inheritance

Take your time. If someone cared about you enough to leave you an inheritance, then you may need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can likely wait. You may be able to make more informed decisions once some time has passed.

Don’t go it alone. With so many laws, choices, and pitfalls, guidance from an experienced professional can be essential.

Think of your own family. When an inheritance is received, it may alter the course of your own financial strategy. Be sure to take that into consideration.

The taxman may visit. If you’ve inherited an IRA, it is important to consider the tax implications. Under the SECURE Act, distributions to non-spouse beneficiaries are generally required to be distributed by the end of the 10th calendar year following the year of the account owner’s death.

It’s also important to highlight that the new rule does not require the non-spouse beneficiary to take withdrawals during the 10-year period. But all the money must be withdrawn by the end of the 10th calendar year following the inheritance. Certain beneficiaries—such as a surviving spouse, disabled or chronically ill individuals, those within 10 years of the IRA owner’s age, and minor children—may have different minimum distribution rules.

Stay informed. Estate laws have changed often, so what you once knew may no longer be accurate.

Remember to do what’s appropriate for your situation. It’s natural to feel emotional about an inheritance, but what if keeping it as‑is doesn’t fit your financial needs?

A financial professional can help determine if the inheritance fits with your overall goals, time horizon, and risk tolerance. Contact us with any questions you might have about special situations like managing an inheritance.