How to Make Your Inheritance Last

Research conducted in 2012 revealed that approximately a third of Americans who inherit money end up with negative savings within two years. Among those who inherit $100,000 or more, almost one in five lose it all through spending, donations, or mismanagement.

If you’re about to inherit, there are several measures you can take to ensure your newfound wealth lasts longer than a few years.

1. Don’t Rush Decisions

Put your inheritance in a safe place temporarily, like a savings account, money market, or CD. This will give you enough time to plan on how you should manage the inheritance. Invest in a long-term money plan or create an emergency fund that is enough to cover your cost of living for 6 months.

If you’re married, you also need to decide if the inheritance should stay in your name or become joint property with your spouse. Be extra careful if you’re thinking of giving some of it to your kids. There might be tax consequences you should know about.

2. Boost Your Retirement Savings

If you’re working and not saving the most you can in your 401(k), think about adding more, especially if your employer matches your contributions. If you don’t have a 401(k), start an IRA. Keep this in mind: if you’ve inherited a traditional IRA, the money you take out will be taxed. To pay less tax, only take out what you have to, and let the rest grow inside the inherited IRA.

3. Assemble a Team of Experts

To create a long-term strategy for your inheritance, it is highly recommended that you seek professional assistance. Here are the people that can help:

  • Financial Advisor: They’ll look at your money situation now and help you plan for the future. This includes investing, choosing the right insurance, handling debt, saving for college, and getting ready for retirement. They can also help you reach big goals like buying a home or starting a charity.
  • Accountant: They’ll help you keep track of your money and pay as little tax as possible.
  • Estate Planning Attorney: They’ll work with you to create a plan for your inheritance. This includes making sure your will is up-to-date, finding ways to lower estate taxes, setting up a plan for giving, making sure your money goes where you want it to, and protecting your inheritance from debts, bad actors, and legal issues.

A sizable inheritance has the potential to sustain you for life. But you don’t have to navigate this journey alone. We’re here to provide answers to any queries you may have about receiving, growing, donating, protecting, and eventually passing on your inheritance to your loved ones. Reach out to us today.

750 F Street, Suite 2
Davis, CA 95616

333 University Ave, Suite 200
Sacramento, CA 95825

3017 Douglas Blvd, Ste 300
Roseville, CA 95616

288 Pearl Street
Monterey, CA 93940

San Antonio
18756 Stone Oak Pkwy, Ste 200
San Antonio, TX 78258

We operate on an appointment-only basis other than our Davis office.

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