What should you do with an inheritance? - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

What should you do with an inheritance?

Print
Font Size:
Default font size
Larger font size

Related Stories

Posted: Monday, July 8, 2013 10:40 am

Will you ever receive a sizable inheritance? You can’t plan on it. But if you do get one, you can plan on using it to help achieve some of your key financial goals.

Once you get word of an inheritance, what steps should you take? Above all, don’t rush to act. If you are in the midst of the grieving process, it’s hard to make good decisions about money. Consequently, you may want to consider “parking” your inheritance temporarily in a liquid vehicle, such as a cash or cash alternative investment. Don’t fret if your inheritance isn’t really growing much for a few months — you’ll have time to put it to work later.

After you’ve parked your money and some time has passed, you can think about what to do with your inheritance. Here are a few ideas:

• Get rid of debts. Use your inheritance to pay off as many debts as you can, especially those consumer loans that are not tax-deductible and that carry high interest rates. 

• Establish an emergency fund. This fund should contain six to 12 months’ worth of living expenses. Without it, you may be forced to dip into your investments to pay for unexpected costs, such as an expensive car repair or a hefty medical bill.

• Review and adjust your financial strategies. If your inheritance is large enough, it may be a “game changer” in terms of how you pursue your financial strategies. For example, you may now be able to speed up your timetable toward retirement, if that’s what you want. Or you may be able to pay more of your children’s college education, thus freeing up more funds for your own retirement savings. In fact, by investing your inheritance in certain ways, you can influence many desired outcomes that you’ve identified in your overall financial strategy. Your financial advisor can help you make those moves that are most appropriate for your individual needs.

• Plan for taxes. Unless you are “inheriting” your spouse’s assets, you may be subject to some type of taxes when you receive an inheritance. Some types of inheritance, such as the proceeds from a life insurance policy, are tax-free. On the other hand, if you inherit a non-spousal 401(k) plan and are forced to take the money as a lump sum, which is likely because most 401(k) providers would prefer to remove the account from their books, your inheritance will be subject to federal, state and local income taxes. However, thanks to recent tax law changes, as a non-spouse beneficiary you can now transfer an inherited 401(k) to an IRA, which allows you to avoid immediately paying taxes on your inheritance. You’ll still be required to take annual withdrawals, which are taxable, but the amount will be based on your life expectancy, so you can spread out your tax burden. To make sure you’re making the right moves with an inherited 401(k), consult with your tax advisor.

You may get only one inheritance in your life — so do whatever you can to make the most of it. 

• This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Joseph B. Ortiz, AAMS, CRPS. Reach him at (480) 753-7664 or joseph.ortiz@edwardjones.com. Accredited Asset Management Specialist and AAMS, Chartered Retirement Plans Specialist and CRPS are registered service marks of the College for Financial Planning.

More about

More about

More about

  • Discuss

Gov. Brown Appoints New Public Utility Commissioners to Replace Florio and Sandoval

Martha Guzman Aceves and Clifford Rechtschaffen both come from the governor’s office with strong environmental protection backgrounds. Martha …

Published: December 31, 2016 - 10:14 am @ https://www.greentechmedia.com/articles/read/gov.-…

Obama preparing to penalize Russia for hacking

WASHINGTON — The Obama administration is preparing to penalize Russia over the hacking of Democratic officials during this year's presidential…

Published: December 31, 2016 - 10:16 am @ http://www.usatoday.com/story/news/politics/2016/1…

Kerry’s Blunt Words for Israel Denounced by Lawmakers in Both Parties

A bipartisan chorus of lawmakers, upset with President Obama’s decision last week to allow the passage of a United Nations resolution condemni…

Published: December 31, 2016 - 10:14 am @ http://www.nytimes.com/2016/12/28/us/politics/john…

Mail truck tips on Mesa street

MESA, Ariz. - A mail truck ended up on its side in a crash Wednesday. Mesa police say a single-vehicle collision left the United States Postal…

Published: December 31, 2016 - 10:12 am @ http://www.12news.com/news/local/valley/mail-truck…

Reports of mall disturbances light up social media

A flurry of reports of mall melees and disturbances rippled across social media Monday on a day Americans swarmed shopping hubs for post-holid…

Published: December 31, 2016 - 9:51 am @ http://www.usatoday.com/story/news/nation/2016/12/…

Graham, McCain want Russia sanctions after election hacking

Top Republican senators said Wednesday that the incoming Congress and President-elect Donald Trump should impose new and tougher sanctions on …

Published: December 31, 2016 - 9:13 am @ http://www.foxnews.com/politics/2016/12/28/graham-…

Immigration Is the Only Hope for States That Helped Trump

The decline of manufacturing does not explain the decline of Wisconsin. Photographer: Daniel Acker/BloombergFacebook Twitter Email Print Share…

Published: December 31, 2016 - 7:17 am @ https://www.bloomberg.com/view/articles/2016-12-28…

Creator of the Red Solo Cup dies at 84

FOX 32 NEWS - The creator of the Red Solo Cup died on Wednesday, December 21, 2016 at the age of 84. Robert Leo Hulseman lived in Northfield, …

Published: December 31, 2016 - 7:07 am @ http://www.fox4news.com/trending/225996868-story

12 Cars You Can Legally Import to the US in 2017

slide-4320347 There were plenty of great vehicles produced abroad that Americans (outside of Canada) haven't been able to import until they hi…

Published: December 31, 2016 - 7:06 am @ http://www.autoblog.com/photos/cars-you-can-legall…

Raw sewage bubbles out of ground, Mesa apartment residents fed up

MESA, AZ - People who live at one apartment complex in Mesa said they have a problem that stinks — raw sewage bubbling up out of the ground an…

Published: December 31, 2016 - 6:35 am @ http://www.abc15.com/news/region-southeast-valley/…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…