When You’re Expecting an Inheritance

The “great wealth transfer” is underway. Over the next few decades, Baby Boomers will pass on $30 trillion in assets to Generation X and Y. If you’ve talked to your older loved ones about estate planning, you may have an idea of the scope of the assets that will wind up in your hands eventually. Have you calculated how this will affect your own estate planning?

Many members of Generation X are in their mid to late forties and fifties and are beginning to make estate planning a priority. You may have already drawn up a will and named your personal representative. But you likely only documented how you’d like your currently owned assets handled. What if there is a future windfall that completely changes your financial picture? How will this affect your estate plan and what should you do?

1. Assemble Your Team

There are three professionals that you can rely on for assistance: an estate planning attorney, a financial advisor and an accountant.

A financial advisor can help you look at the big picture – how will your inheritance help you accelerate towards your previously determined goals? Next, an estate planning attorney applies their knowledge of tax and inheritance laws, providing specific strategies to save you money and ensure your assets are handled according to your wishes. Finally, an accountant can help you make sure all of your present filings are in order so you’re not surprised with a major tax bill.

At slnlaw, we like to think we’re more than just estate planning attorneys. We help you look at your assets and finances from a 10,000 foot view, but we also provide the up-close expertise needed to preserve your resources. We have your best interests in mind.

2. Ask the Right Questions

Once you’re in front of the right professional, it’s time to make decisions. In order to make sure these decisions are ones you won’t regret, ask yourself the following important questions:

How much of this inheritance do you need right now?

The answer will vary based on your age, income and net worth. You may want to use it to fund a child’s college education or retire earlier. Consider how the inheritance can help your current situation.

What is the actual value of all of your assets?

First, figure out how you’re going to meet the goals you’ve set with your current assets, then calculate how the inheritance can help you get there. One of the reasons why seven out of 10 people will spend their entire windfall is because they use the inheritance as leverage for a lifestyle inflation, such as using the money as a down payment on a property with a mortgage they can’t afford.

3. Plan Your Legacy

If your inheritance adds significantly to your net worth, it may push you over the estate tax exemption. By setting up a trust to bequeath funds to family or charity, you will protect your estate from tax penalties and ensure your beneficiaries are in the best position possible after your passing.

In all of the above, consider slnlaw LLC your trusted partner when navigating estate planning after an inheritance. Contact us today to set up a free consultation with our team.

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