According to Investment News, during the next three decades, baby boomers will pass along an estimated $30 trillion in wealth to their heirs, via inheritance. For most people, suddenly learning that you are $500,000 or $1 million richer is welcome news. However, for an individual who is in his or her 40s, 50s or 60s; it’s important to plan wisely to ensure that a windfall isn’t wasted.

The inheritance of a considerable amount of wealth can be overwhelming. This is often especially true for individuals who previously struggled financially. While it can be tempting to spend all or a portion of one’s inheritance on a long pined-for home or car, to ensure for one’s own future financial security, it’s wise to consult with an estate planning professional who can provide financial and investment advice, guidance and assistance.

Upon receiving an inheritance, it’s wise to put the money into an account or accounts where it cannot be easily spent. Putting money in a money market account or short-term CD ensures that one’s inherited assets are safe and secure. It’s then wise to take a look at any outstanding debts and determine what to pay off. For example, paying off high interest credit cards may make more sense than paying down or off a car or home loan.

Once debts have been settled, an individual is advised to stow away a considerable amount of inherited assets into savings, retirement and investment accounts. Depending on one’s stage in life, possible options include a 529 college savings plan, Roth IRA, CD, treasury securities and the stock market.

In some cases, when relatives and friends get wind of an inheritance; requests for loans, gifts and donations come pouring in. When faced with these types of financial requests, it’s important to remain steadfast and stick to one’s long-term financial plan. That’s not to say that an individual shouldn’t gift money to a struggling child or donate to a charity. It’s wise, however, to consult with an estate planning professional and have a comprehensive plan in place.

Source: Consumer Reports, “How to handle an inheritance: Follow these 9 steps to avoid making some common mistakes,” Feb. 2011

Additional resources provided by the author

For more information, please contact estate planning attorney Regina Kiperman:
Phone: 917-261-4514
Email: rkiperman@rklawny.com
Or visit her at her new location:
80 Maiden Lane
Suite 304
New York, NY 10038

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