Plan Carefully Around an Inheritance

You've probably heard stories about athletes and other famous people squandering their wealth and ending up broke and in debt. Spending money irresponsibly without having a strategy can quickly reduce millioins of dollars to zero. If you receive an inheritance, planning with the aid of your financial and tax professionals can help you preserve your windfall and honor your benefactor's legacy.

Avoid Emotional Decisions

The death of a loved one can cause a variety of emotions: shock, grief, sadness, and others. Before you make any decisions about what to do with an inheritance, take time to reflect on your loved one's life and contributions while you process the loss.

Consider Your Options

Inheriting substantial assets can be life changing but only if you plan carefully. Your short - and long-term goals can help you determine yoru best options for using your new-found wealth.

You could:

• Pay off debt


• Build up your emergency fund


• Retire your mortgage


• Put money in a college fund


• Add to your investments


• Give to charity

Assemble a Team

Put together a team of professionals to help you make prudent decisions that take taxes into account. The team might consist of your tax advisor, financial professional, an estate planning attorney, and your insurance agent. You could also add a real estate professional if you plan to buy or sell property.

Beyond Cash and Investments

An inheritance often includes a house and its contents. Once you've chosen the items you want to keep, you'll need to find a way to dispose of the rest. Start by obtaining an appraisal for anything valuable, such as jewelry, artwork, or antiques. Ask the appraiser to recommend a buyer who might want to purchase some of these items. Then hold a garage sale or contact an estate liquidation company to dispose of the remaining contents of the house.

Don't Forget to Treat Yourself

Set aside some of your inheritance to spend on yourself. You're more likely to stick with. your plan for your windfall if you don't feel deprived.