In my job as a financial professional helping Americans living in Israel with their U.S brokerage accounts, I regularly receive calls from people who just received an inheritance and don’t know what to do with it.
The first three things you should do after receiving an inheritance are:
Take a step back
Many emotions surround an inheritance. People feel an intense dichotomy between the relief that having “extra” cash gives them and the grief of mourning. As such, don’t make any decisions at all. Let your emotions settle down first and don’t do anything in haste. Remember that the deceased wanted you to receive the funds, so you needn’t feel guilty about getting the gift.
Make decisions carefully
Frequently, upon receiving an inheritance, people choose to donate to charity or to gift the money. Consider the best way to give it to others, and don’t make rash decisions. And certainly don’t let others (like kids) pressure you to give them the cash. If you sense that kind of manipulation, tell them you must first consult with your financial advisor.
Receiving an inheritance changes your own assets, so evaluate your new situation objectively. Is your inheritance of $100,000 really enough to buy an apartment for your children, wipe off your mortgage, and pay for an extravagant vacation? While a windfall may seem like a huge sum of money, its purchasing power is limited.
Another important point to ponder: Do you want to spend the funds or invest them so that one day you can leave an inheritance of your own?
Plan your financial future
The flow of extra cash into your accounts can alter your asset allocation, so now is the time to create/update your financial plan. Use this opportunity to rebalance and make sure your investments are aligned with your goals. After all, your benefactor would probably be happy to know that his inheritance was well received.
If you recently received an inheritance (or anticipate receiving one), meet with a financial professional to re-evaluate how to best use the extra funds to meet your goals. Profile Investment Services, Ltd. has extensive experience in helping folks navigate this challenging time. Let our local presence and global expertise help you. Call to begin a conversation 02-624-2788.
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 November 2, 2015. Updated July, 2019. Updated January 2022