“If you spend that amount of money from the inheritance you just received,” I told a client a few years ago, “it’s going to vanish over time.” Guess what? It did. This client spent hundreds of thousands of dollars and had nothing to show for it, other than feelings of regret. Even if you’re lucky enough to receive a significant sum of money, if you spend it rashly, you’ll run out of money. But, if you invest (even a small sum) wisely, it could significantly improve your financial security.
When I help people open American brokerage and retirement accounts from my office in Jerusalem, I see many different personalities. Some folks worry about the money, some celebrate it, and others just are confused. A critical part of my job is helping clients understand their financial choices so that they don’t regret decisions later. Here’s what I suggest:
Look at the bigger picture
Getting an inheritance is not only about receiving a cash infusion. It’s also about fitting that money into your overall financial plan. How the inheritance was received (an IRA, stocks, mutual funds, cash, etc.) can affect your options.
Don’t be rash
When getting an inheritance, some people can’t wait to get the money and they may spend it before it’s even in their hands. This is one of the worst mistakes you can make when you get an inheritance. Claiming an inheritance may entail a lengthy legal process.
Get professional advice
If you recently received an inheritance or you know you are in line for one, consult with a financial professional to help you get the most out of your new wealth. Withdrawing funds or not properly titling accounts can incur penalties and taxes. For more resources on what you should do when you receive an inheritance read: Profile-Financial.com/inheritance
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published April 30, 2018. Updated July 2020. Updated April 2022