What To Do When You Inherit Money
Receiving an inheritance can be both a blessing and an emotional experience. Many times it comes after the loss of someone you care about. Along with the emotions, there are often important financial decisions that need to be handled correctly.
Here are a few practical steps to consider if you inherit money.
1. Take a Breath Before Making Big Decisions
One of the most common mistakes people make is moving too quickly. An inheritance can create pressure to invest, spend, or make large changes right away.
In most cases, it’s wise to slow down. Give yourself time to understand what you received and how it fits into your overall financial plan.
2. Understand What You Actually Inherited
Not all inheritances are the same. Some assets come with tax considerations or specific rules. Examples include:
Inherited IRAs or retirement accounts
Brokerage accounts or stocks
Real estate
Life insurance proceeds
Cash or bank accounts
Each of these may be treated differently from a tax and planning standpoint. Knowing exactly what you inherited is an important first step.
3. Be Aware of Tax Rules
Many inherited assets have specific tax rules that people don’t realize until it’s too late.
For example, inherited retirement accounts often require distributions over time. Taking money out incorrectly can create unnecessary taxes.
Understanding these rules early can help you avoid costly mistakes.
4. Consider Your Long-Term Plan
An inheritance can be an opportunity to strengthen your financial future. Some people may choose to:
Pay down debt
Increase retirement savings
Build an emergency reserve
Invest for long-term growth
Set aside money for children or grandchildren
The right approach depends on your personal goals and financial situation.
5. Coordinate With Your Overall Financial Picture
An inheritance should not be looked at in isolation. It should fit into your broader financial plan, including:
Retirement income planning
Tax strategy
Estate planning
Investment allocation
When everything works together, the inheritance can have a much greater impact over time.
Final Thoughts
An inheritance can be a meaningful gift, and handling it thoughtfully can help honor the person who left it to you.
If you’ve recently inherited money and would like help understanding your options, feel free to reach out. I’m always happy to have a conversation and help you think through the next steps.
Cetera Wealth Services, LLC exclusively provides investment products and services through its representatives. Although Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services, Cetera representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice.
Zach Coggins, CRPC®
Milestone Wealth Advisors
(803)736-3406 Call or Text
Zach@milestonewealthadvisors.com
3321 Forest Dr. Ste.7 Columbia, South Carolina 29204