Receiving an inheritance comes with grief and happiness. At the same time, it can be a confusing time for somebody if they have received an inheritance because it has come off the back of sadness in the family. Safeguarding your inheritance isn’t just about making those immediate financial decisions, but it’s about how you grow, preserve, and manage it for future generations, especially if that inheritance is a large one.
Receiving an inheritance can be an overwhelming and emotional experience, and you may not know where to start, especially if you’ve never had this type of financial wealth before. Having a wealth management advisor to help you along with what to do with your money is one thing, but knowing what to do in the first place when you receive an inheritance is quite another.
Whether it’s a significant amount of money or a smaller gift, the emotions that are tied to inherited money often make it very difficult to think clearly about what you should do next. With the right advice and planning, you can make receiving your inheritance a positive thing, even if it takes you time to reconcile. Let’s take a look at what you can do with your inheritance.
What to Do When You Receive an Inheritance
- Take a moment to reflect. Instead of barrelling in and starting to spend the inheritance money you’ve been given, you need to think about this and really sit with your emotions. It’s not a smart idea to make any financial decisions off the back of grief because those decisions are going to come from a grief-filled place and not from a wealth management place. Many people feel very strong connections to the inheritance that they receive, especially if it represents a loved one’s wishes or their life work. Feeling pressured to spend or allocate funds immediately is natural, but you can sit on this and wait as long as needed.
- Call a wealth management planner. If your inheritance is quite significant, then calling a financial planner is a good plan. Once you’ve had time to process your emotions, planning is next. Financial professionals can give you tailored advice based on the amount of your inheritance that you’ve received, ensuring that you avoid the common mistakes and make the most of the inheritance. They’ll help you assess your financial situation and set clear long-term goals for other money. They’ll also assist you with creating a balanced investment strategy so it doesn’t get frittered away.
- Understand your tax obligations. Some countries will tax inheritance, and this amount of money depends on the amount of inheritance you receive. Most inheritances in certain countries around the world are not subject to inheritance tax because of that, but that doesn’t mean you still don’t have to consider the tax obligations.
- Think about an investment plan. Once you’ve got through the emotional side of receiving an inheritance and you understand the tax implications, you need to then think about how you’ll invest it. Whether you want to preserve your wealth, grow it, or fund a major purchase such as a home or an education, the right strategy is really going to depend on your long-term goals. You might decide to invest in property or have a diversified portfolio of shares and bonds. You might also consider paying down some debt so that you can give yourself even more financial freedom and some breathing room to think.
- Think about charitable giving. Many people get an inheritance and the guilt that comes with that inheritance means that they tend to give it away. They’d rather give it to charity than enjoy it themselves because they don’t feel they’re in, they’re deserving of it, or they feel like they’ve come into money just because somebody has died. If this is how you want to go with your inheritance money, you can do that. It’s a very meaningful way to honor the deceased and make a positive impact.
- A lasting legacy. Having an inheritance isn’t just about making some financial decisions, but it’s an opportunity to think about those who come behind you. If you have children and you want to pass your wealth on to them, now’s the time to start planning that. And that’s why you need to work with a financial planner to help. Being proactive and informed about your inheritance and how you can plan for their future will help you to transform a huge financial gift into a lasting legacy.