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

This baby Harry Potter fan grew up to be like Hermione Granger

Taken in 2003, this adorable photograph of a six-month-old baby girl with her mum is a perfect example of early Harry Potter fandom.  The baby…

Published: July 30, 2016 - 12:48 pm @ http://mashable.com/2016/07/30/harry-potter-baby/

Justice Department to review fatal Arizona police shooting

PHOENIX (AP) — The U.S. Justice Department will investigate the fatal shooting of a woman by a Winslow police officer. Justice Department spok…

Published: July 30, 2016 - 12:48 pm @ http://bigstory.ap.org/article/e6616d002f73468e856…

Buckeye AZ Police Department - Timeline

@BuckeyeAZPDPublicSee more of Buckeye AZ Police Department by logging into FacebookMessage this Page, learn about upcoming events and more. If…

Published: July 30, 2016 - 12:46 pm @ https://www.facebook.com/BuckeyeAZPD/posts/692718737560052

Reward offered after armed robbery at Taco Bell

SCOTTSDALE, AZ - Know this man? Silent Witness is offering a reward after they believe he robbed a Taco Bell. The incident happened at a Scott…

Published: July 30, 2016 - 12:26 pm @ http://www.abc15.com/news/region-northeast-valley/…

The return of the Luddite president

Whether Hillary Clinton or Donald Trump wins the White House, one thing seems sure: The U.S. will get a president with scant first-hand unders…

Published: July 30, 2016 - 12:18 pm @ http://www.politico.com/story/2016/07/luddite-pres…

Radio Phoenix Podcast with Man Hands

Local punk rockers Man Hands came down to the Phoenix Center for the Arts for another installment of Rise on Radio Phoenix. And of course they…

Published: July 30, 2016 - 11:55 am @ https://www.yabyumwest.com/2016/07/radio-phoenix-p…

Space Standoff: The next Cold War is already playing out right above our heads

There’s a cold war in space and virtually no one knows about it. Right now, miles above your head, there are fleets of robotic, weaponized sat…

Published: July 30, 2016 - 10:18 am @ http://www.digitaltrends.com/cool-tech/weaponized-…

The Noise Addicts of New York City: Best #Cityreads of the Week

“Noise is a Drug and New York is Full of Addicts,” Susie Neilson, Nautilus As soon as the door slams, I slide to the floor in a cross-legged p…

Published: July 30, 2016 - 10:19 am @ http://www.citylab.com/design/2016/07/the-noise-ad…

Mesa Mountain View's Hodges Commits to Sun Devils

The good times continue to role for Arizona State this offseason from a recruiting stand point as the Sun Devils have added another local pros…

Published: July 30, 2016 - 9:46 am @ http://www.sports360az.com/2016/07/mountain-views-…

Matt Damon's Company Takes Steps to Address Hollywood's Diversity Crisis

Print 'Black-ish, Other Contenders Could Signal Emmy Diversity Oscars Organizers' Invitation to New Members Reflects Diversity Push Oscar Winn…

Published: July 30, 2016 - 9:17 am @ http://www.voanews.com/content/matt-damon-hollywoo…

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…