If you are fortunate enough to receive an inheritance, consider these steps to make sure the money you receive after a loved one dies is used to its best advantage.
Give yourself time to assess the situation before making any purchases, paying down debts, or agreeing to investments. Avoid making hasty emotional decisions. Also, be careful who you tell about your newfound wealth.
Your team should include a tax advisor, a financial planner who serves in a fiduciary capacity, and an estate attorney.
Take time to prioritize your financial needs and goals. Carefully assess your financial picture. Analyze your cash flow and planning goals so you can maximize and protect your sudden wealth for both short-term financial needs and long-term financial security.
Financial priorities may include the following:
Once you have made a financial plan and allocated the money accordingly, there’s something to be said for treating yourself. Consider using a small percentage as “fun money.”
While a sudden windfall has potential to change your life, it does not need to be an excuse to change your lifestyle. Deploying your newfound wealth wisely can help you climb onto firmer financial footing and lay the groundwork for a more secure future.