What To Do With Your Inheritance

What To Do With Your Inheritance


What To Do With Your Inheritance

Doing your homework and seeking advice is highly recommended when an individual or family is faced with what to do with an inheritance. Understanding your options is crucial in a potential life changing event.


Depending on the stage of life you are in when you inherit assets will have a lot to do with how you want to plan for managing them. For some people, this may be a lot of money and they have never experienced this type of wealth in their life and for others it could mean dealing with assets they’re unfamiliar with. Either way, it is crucial that you meet with a seasoned financial advisor who can hold your hand through this time. In other words, please do not go out and buy a new car right away! I know that sounds funny, but I’ve seen it before and that may not be the best financial move for you at this time. When I work with clients who inherit assets I make sure they have the following:

  1. Financial Plan
  2. Proper Structuring of all assets
  3. Income needs met

Inheriting assets can typically happen in two ways. You inherit monies though a Trust or you were left as beneficiary on an asset. In 2016 the estate tax exemption is $5.45 million. So for the most part if you inherit under $5.45 million there is no federal tax due. Check with your CPA in regards to if your state has state tax for inheritance. There are some other variables that play into this $5.45 million exemption so please consult your CPA or qualified tax professional to clarify your potential tax liability.

When inheriting assets through a Trust you receive asset/creditor protection of those assets. Let’s make up a scenario. Let’s assume your parents created a family revocable trust and upon passing of the last parent you were the sole beneficiary to their estate. Let’s also assume you are married, the relationship is on the rocks, have had some credit issues, and creditors are on your back. All assets you inherited, as long as you don’t commingle them with your spouse stay your assets forever and even in the event of a divorce as a GENERAL statement. Please consult your Trust attorney for more details. When your parents passed away, their revocable trust now became an irrevocable trust. As long as assets stay in the trust, creditors cannot attach liens or judgement on those assets.

Inherited IRA

Inherited IRAs can be very tricky. Please talk to a qualified financial advisor about your options in regards to withdrawals you must potentially take on this asset. There are some options for you in regards to the Inherited IRA on how you can take distributions. There has been some recent court ruling that now states Inherited IRAs do not have the same asset/creditor protection as traditional or Roth IRAs.


I just wanted to lightly touch on a couple popular topics when it comes to inheriting money. Hopefully you found this information helpful. Please give me a call or email if you have inherited some money or are about you. I have tremendous experience helping individuals and families with this process. I want to help ensure you make use of these assets so you may be able to leave a legacy as well.

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