RECEIVING AN INHERITANCE
Coping with the loss of a loved one is never easy. Although receiving an inheritance represents an emotional time in your life, it also presents you with an opportunity to care for your family financially. It's important to plan how you use your inheritance wisely. Below are some suggestions on how to manage your inheritance money:
Determine how you want to use your inheritance
When the time is appropriate and you are ready to invest or spend your inheritance, first you should think about your short-term and long-term goals. For example, you may want to save for a house, save for a college education fund for your children, or travel. By determining what your financial goals/priorities are, you can then take the best course of action. Keep in mind that there may be tax implications from receiving an inheritance.
Pay off debts
You may want to use your inheritance to pay off or reduce outstanding debts, such as credit cards, student loan(s), car payment(s), etc.
Prepare for unforeseen circumstances
One way to make the most of your inheritance is to set aside a portion of your money into an emergency savings account. Saving your money separate from regular savings or checking accounts may allow you to cover any unforeseen costs that may arise without setting you back financially.
Additionally, it may be appropriate for you to use your inheritance to protect yourself and your family with various forms of insurance coverage, such as health, life, homeowner/renter's and/or auto.
Invest for the future
Some of the long-term goals that you identified in thinking about how to use your inheritance may require a significant amount of money. Ensuring that you have the financial security for a comfortable retirement for example, requires planning.
Donate to charity
Donating some of your inheritance to charity may be a great way to reduce taxes. Consult with a financial advisor for more information on how you can reduce taxes with charitable giving.
Increase the size of your savings account
While there may be temptation to spend money on things that you've always wanted, such as a new car or European vacation, upon receiving an inheritance; it's important for you to manage your new assets wisely. Saving your money will allow you to achieve more of your future goals, as well as to take care of your financial priorities.