Having a large inheritance may be both a hardship and a blessing. Even if you have a feeling that a family member will remember you in their will, there are many aspects of the inheritance process that you may not have considered. If it happens, here are some things to bear in mind.
Remember that this material is intended to provide general information and is not intended to substitute professional advice, so consult with a legal or tax professional before making any choices regarding an inheritance.
Please take your time
If someone loved you enough to leave you an inheritance, you may need time to grieve and come to terms with their departure. This is necessary, and many of the more significant decisions regarding your inheritance can likely be made. After some time has gone, you may be able to make better decisions.
Don't try to do it alone
There are so many laws, options, and potential pitfalls that the expertise of an experienced professional on this subject could be helpful.
Consider your own family
When you receive an inheritance, it may change the way you plan your finances. Make sure to take it into account.
The taxman might start showing up
It's crucial to think about the tax implications if you've inherited an IRA. Distributions to non-spouse beneficiaries are normally required to be made by the end of the tenth calendar year following the account owner's death under the SECURE Act.
It's also worth noting that the new rule exempts non-spouse beneficiaries from having to take withdrawals throughout the 10-year timeframe. However, by the end of the tenth calendar year after the inheritance, all funds must be withdrawn.
Keep yourself updated
The laws governing estates have changed significantly over time, so what you thought you knew about them may no longer be accurate.
Remember to act in a manner that is appropriate for your circumstances. While it's natural for emotions to play a role, and you may desire to keep your inheritance in its current state out of respect for your relative, what if the inheritance isn't suitable for your financial situation? A financial advisor can help you assess if the inheritance is compatible with your overall objectives, time horizon, and risk tolerance.
The views expressed in this material are for informational purposes only and are not intended to provide particular advice or recommendations to any individual. Consult your financial advisor before making any investments to decide which ones are right for you. All performance data is historical and does not guarantee future outcomes. All indices are unmanaged, and therefore cannot be directly invested in. The information provided is not meant to replace unique, individual tax planning or legal counsel. We recommend that you seek the advice of skilled tax or legal counsel.