Receiving an inheritance can carry the weight of loss and the confusion of wondering, “What now?”
If you are overwhelmed with what your loved one left behind, here are 5 next steps:
1. Recognize the loss.
If you need the space to grieve, take it. Loss is always hard, and everyone reacts differently. Find others to support you and ask for help.
Losing a spouse is especially heavy. Your day-to-day will change, and if you were a caretaker for your loved one, you may feel like your purpose is gone. It’s important to stay open. Don’t isolate and don’t move forward without grieving.
2. Find your footing.
When you are ready, figure out what was left behind and what your loved one’s wishes are. This process is simpler if they had a will or trust.
Financially speaking, it is common for one spouse to be more in control of the investments and accounts. If you’re unsure of what to do, ask questions and, if necessary, find someone to help sift through documents and manage affairs. Your Wealth Manager and Financial Planner are great people to turn to.
As a child or non-spouse, information and communication are key. Unfortunately, the idea of inheriting assets can change people’s minds and hearts, so you may need to maintain peace, especially if wishes are unclear. We take every precaution to educate our clients and organize documents so the transition of assets goes smoothly to the heirs. As much as you can, be cooperative and open.
3. Consider (and perhaps cut) taxes.
What about taxes? If you are a non-spouse heir, you might wonder how the government will get their share of your inheritance (and how much it will be). Instead of assuming you know what to do, talk to an expert. You may not have to pay as much as you think. For example, in their research to track down cost basis and tax issues, our team saved a husband and wife over one hundred thousand dollars they thought they owed in taxes on an inheritance.
4. Determine the rules of use.
Determining the rules of use is especially important for a non-spouse inheritance. For example, depending on the age of the loved one at death, an heir may need to take RMDs (Required Minimum Distributions) and have a 10-year window in which the account must be liquidated. The recent Secure Act 2.0 has some great information about inheritance rules of use.
For a spouse, account movement is simpler. There are no windows to liquidate and the accounts can be moved and organized more easily.
5. Create a plan.
While you may already have a financial plan, an inheritance can necessitate a change. If you lost a spouse, you’ll want to reassess your plan, goals, and estate. At Credent, this might mean holding another Set the Compass meeting.
For some, this is the first time you are introduced to investing and making decisions that can have taxable consequences without sound advice. A trustworthy financial expert will keep you on the right track.
If you have questions or would like a complimentary meeting to discuss the best ways to navigate an asset transfer, reach out at email@example.com
Investment advice offered through CX Institutional, a registered investment advisor.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.