Use Your Inheritance Wisely!
Avoid mistakes commonly made by those who come into an inheritance and keep in mind these tips for when you receive yours:
1. Set up or add to your emergency fund. Job loss and unexpected expenses happen. Have at least 6 months of living expenses in an easily accessible account in order to make up for any shortcomings in your monthly income.
2. Do not make any hasty decisions. There is no “deadline” by which you must spend your inheritance. Leave your inheritance in place for a few months while you develop an overall plan with your financial professionals.
3. Maintain your lifestyle. Whether you receive $10,000 or $1,000,000, your daily routine should not change because of an inheritance.
4. Do not think of your inheritance as a windfall. Use your inheritance wisely to pay down any debt you may want to eliminate or start your children’s college fund. Spending for the sake of spending will exhaust your inheritance quicker than you think.
5. Protect your children. Be aware that there is an appropriate time and manner in which you should share your inheritance with your children. Many adults lack the proper skills to deal with money, and children are no different. Make sure your kids have to wait for their portion of their inheritance by preparing a proper estate plan.
Estate planning is not required, but it facilitates the transfer of wealth to the next generation. If you are interested in planning or updating your estate, we at The Becker Law Firm would be happy to answer your questions and help you.