[Video] What To Do When You Receive An Inheritance

MICHELLE SMALENBERGER, CFP ®

Have you received an inheritance and need to understand the steps to take or what to do?  One of my favorite stories of a client who inherited funds from a loved one was all about the history of the person who left the inheritance.  A grandfather passed away and the parent was executor and trustee in charge of getting the funds to the grandchild. The parent sent a note along with the funds explaining what family meant to the grandparent and his attitude toward saving and spending money throughout his life. This family shared many vacations together so this last inheritance of money was really just more of the overall inheritance shared from the grandfather through life.

Here are some steps you should take now that you’ve received an inheritance:

1. Get advice from a financial advisor.

Before taking any action you want to understand the steps in order to gather documents and funds in order to distribute them properly.

2. Consider tax implications:

Depending on the type of assets you’ve inherited you need to understand how they will be taxed, if at all.  Treatment could be different depending on whether it’s an IRA, real property like a home, or life insurance.

3. Consider the change this makes on your own plan:

If you already have a financial plan in place will this enhance your own plan?  Or would you rather pass these inherited assets on to future generations or charitable organizations?

4. Understand the documentation needed:

There will likely be paperwork you need to complete in order to prove you are the beneficiary.  Also, you will need a death certificate or various legal documents along with account paperwork depending on the company the funds are held a

Going through this process you can avoid  mistakes that will affect how much of your inheritance you keep.  Now that you go through this process you’re able to extend that legacy from the person who meant to pass these funds along to you.

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