Receiving a large inheritance can be a life-changing event both in a good way and in a bad way. It can be great if you use the inheritance to give yourself and your family a better life. However, if you spend too much of the inheritance, you might get so used to spending that eventually you end up with less wealth than you had before the inheritance.
For this reason it is always advisable that people who receive large inheritances get help from professionals. Accountants, financial planners and estate planning attorneys are all important sources of expertise for those who inherit wealth. Once you have the experts in place, there is still more planning to do.
Forbes recently published some advice on how to go about that planning in "Planning For Inheritance: 4 Ways To Handle A Windfall."
The suggestions include:
- Understand Your Financial Situation – Figure out how much you really have and make sure that you have properly valued your assets.
- Determine Your Goals – There are already things that you want out of life, such as retiring, paying for a child's education, buying a new home, etc. Instead of just spending the inheritance on things you want, figure out how you can best use it to help achieve your pre-existing goals.
- Make it Last – Determine how much money you will need for future goals and invest enough of the inheritance as necessary so that you will have that money when it is needed.
- Make an Estate Plan – Get an estate plan so that you can pass on what is left of your inheritance to future generations.
Reference: Forbes (Nov. 6, 2015) "Planning For Inheritance: 4 Ways To Handle A Windfall."