Though I often advise people to wait before investing an inheritance, sometimes you must move quickly.
When do you need to act?
If you inherited a risky position, you should consider liquidating it. For example, the grandfather who always managed the stock portfolio passes away, leaving large amounts of money invested in a few individual stocks. Unable to live on her own, the grandmother who now owns the stock portfolio needs to move to a nursing facility. What would happen if she waited for a year to deal with the account and then, the stock market crashed? She wouldn’t have the funds to pay her bills.
How much money do you need now?
If you inherit a portfolio of stocks, ask yourself if you are in a position to wait (possibly for years) to use the money. A fancy car or a luxurious vacation is not an emergency expense. On the other hand, paying for home health care or other medical procedures may very well be a question of life and death and cannot be delayed. Any money needed for the near future, regardless of the type of investment it was in when you inherited it, should be converted to liquid assets like short-term bank deposits, money market funds, and cash. If that means selling stocks, it’s the right choice. After all, wealth should first and foremost be used for your family’s health and well-being.
How to get the money quickly
Depending on the account’s structure, accessing the funds may be a challenge. Even if an account is titled “joint account” or “transfer on death,” there may be procedures to follow before the money is fully available. Nonetheless, make sure money is available to each spouse separately so that the survivor does not face undue financial pressure caused by bad planning.
Not sure how to structure your accounts?
If you have assets, especially money in different countries, contact a cross-border financial professional who can help you determine the best way to structure your portfolio. To learn more about what you need to do when receiving an inheritance go to profile-financial.com/inheritance.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published May 9, 2016. Updated February 2020