Receiving an inheritance can feel like a life-changing gift, and if managed wisely, it can create lasting impact for you and even generations to come. However, studies show that nearly a third of Americans who inherit money end up with little or no long-term increase in wealth—often because they spend their inheritance too quickly. Among baby boomers who inherited $100,000 or more, about one in five exhausted it completely. If you’re anticipating an inheritance, here’s a roadmap to help make your windfall last.

Take Time to Make Thoughtful Choices

When your inheritance arrives, there’s no need to rush. Creating a smart financial plan can help you achieve long-term security. Here are some initial steps to consider as you start crafting your strategy:

• Park Your Funds: Consider placing the money in a secure account, like a savings or money market account, or a certificate of deposit (CD). Remember, accounts are only insured up to $250,000 per depositor, so if your inheritance exceeds this amount, you may need additional strategies to protect it.
• Establish an Emergency Fund: If you don’t already have an emergency fund, set aside enough to cover at least six months of expenses. If you already have a fund, consider building it to cover a full year’s expenses for added security.
• Decide on Account Ownership: If you’re married, consider whether to keep the inheritance in your sole name or open a joint account. This decision is critical if you want to protect it from being classified as a marital asset in the event of a future divorce. Even if kept separate, using the funds for family expenses may create complications, so seeking legal guidance can be invaluable.
• Plan Carefully for Gifting: If you’re thinking about gifting part of your inheritance to family members, be aware of potential gift tax implications. Working with a professional can help you avoid unexpected tax consequences and structure the gift correctly.
• Manage Debts Wisely: If you’re carrying significant debt, using a portion of your inheritance to pay down balances can free up cash flow and reduce financial stress.

Still in the Workforce? Boost Your Retirement Savings

A solid retirement plan is essential for a lasting legacy. Financial experts recommend that by age 30, you should have saved a year’s salary; by 40, three times; by 50, six times; and by 60, eight times your salary. If you’re still working, consider maximizing contributions to your retirement accounts, particularly if your employer matches contributions. For those without a 401(k), funding an IRA is a smart alternative. And if you inherit a traditional IRA, remember that withdrawals are taxable, so plan accordingly to minimize tax impact.

Build Your Dream Team of Advisors

Managing a significant inheritance requires professional guidance. Here’s who you need on your team:

• A Financial Advisor: Your advisor will help you build a foundation for the future, including investments, retirement, and savings goals.
• An Insurance Agent: They’ll help identify the insurance coverage you need to protect yourself and your family from unexpected costs or liabilities.
• A Tax Professional: A tax advisor can guide you on cash flow strategies and tax-saving options to minimize capital gains and other income taxes.
• Estate Planning Professionals (That’s Us!): We’re here to make sure your legacy is preserved and protected. From establishing or updating your estate plan to structuring a charitable giving strategy, we can help protect your assets from potential risks and help you create a lasting legacy for the next generation.
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An inheritance that’s properly managed can provide comfort and security throughout your life. You don’t have to go it alone, though—our team is here to answer your questions and help you plan so your legacy benefits you and your loved ones in the best ways possible.

At Trust Counsel, We Help You Build a Lasting Legacy

An inheritance that’s properly managed can provide comfort and security throughout your life. You don’t have to go it alone, though—our team is here to answer your questions and help you plan so your legacy benefits you and your loved ones in the best ways possible.