Inheritance, by definition, is the devolution of property on an heir or heirs upon the death of the owner. Wow! Can you imagine a more impersonal definition of inheritance? I know the topic is controversial and not everyone views an inheritance the same way, but it is a very important subject to reflect on. Granted, not all inheritances are equal. However, those that do receive them should be careful on how they proceed with them.
Before I dig into this topic it is very important to know that you should consult a tax professional and possibly an attorney with any inheritance you receive before you begin to determine what you might do with it. My article is more prevalent to what you do after your inheritance has cleared taxes, probate and any legal hurdles before getting into your hands.
Most inheritances come in the form of some type of monetary value. With that said, you should know that the most common theme when we talk about estate planning is not leaving an inheritance but leaving a legacy. I can’t tell you how many times that we have spoken with clients about their estate planning needs and we hear about how concerned they are about getting things right for their heirs. There is a lot of sentimental value in play, and they truly want their heirs to get more than just monetary property. The overwhelming majority want to leave a legacy of how they want to be remembered. They also don’t want to hurt anyone with or without money. Don’t misunderstand that last sentence. They are truly concerned about leaving money behind to someone they think might not be capable of handling it for fear that it might do more harm than good. Sometimes, it makes more sense to spread that gift over years instead of a mere lump sum to protect heirs from themselves and or their family. No matter how or what you receive, you need to follow a few steps.
First, slow down once you receive the inheritance. It’s very important to allow yourself the time to reflect upon the gift before you decide what you will do with it. You could have a multitude of options with your inheritance unless the gift comes with specific instructions for use. Time will help you decipher what makes the most sense for you and your family before actually moving forward with your plans.
Second, understand that the inheritance is yours! So many times I see heirs hanging on to items whether it be real estate, stocks and bonds, cars, and a host of other things because they still see them as their benefactors items. The reality is they left it to you for your discretion. As long as you took the proper amount of time to reflect on what to do and how to do it, then you should be at peace making informed decisions about the steps you take with those items.
And lastly, make preparations to put yourself in a position where you might be able to do the same thing for your heirs one day. Remember, for the vast majority, it’s not about leaving an inheritance but more importantly leaving a lasting legacy. With proper planning, you could do the same.
