By Julia K. Pham, CFP®, AIF®, CDFA®, Wealth Advisor featured in Kiplinger
Heirs receiving an inheritance can expect the process to take time. Having a plan for the money and consulting with professionals are also things to keep in mind.
Getting an inheritance can feel very much like a mixed blessing.
It often comes after the passing of a loved one – while you’re dealing with the emotions of losing them and trying to organize financial and administrative affairs.
You can’t always predict what is left in a will, but if you have received or anticipate receiving some type of inheritance, there are important things to consider that can help you prepare for the issues that heirs face. Here are my top four.
1. Expect the Process to Take Time. online pharmacy buy aricept no prescription with best prices today in the USA buy propecia online comdistec.com/images/photoalbum/jpg/propecia.html no prescription pharmacy
Settling an estate is a big task. When a decedent’s affairs aren’t in order, it’s an even bigger task.
In fact, Gallup estimates that less than half of U.
S. adults have a will.
The probate process can be avoided if assets are held in trust, but even distributions from trusts carry their own complexities at times. Because of that and many other potential speed bumps along the way, settling an estate can take several months, sometimes years.
Knowing that will help you manage expectations related to the timing of when you’ll receive your inheritance.
The executor (the person appointed to administer the will) must notify beneficiaries and interested parties, pay outstanding bills, close accounts, take inventory of assets and determine if any of the assets not part of the will must go through probate. Then they must file with the IRS to pay taxes. Only after all of that is taken care of can the assets finally be distributed to close the estate.
2. Have a Plan for the Money.
Take your time. Getting an inheritance can feel like found money, and we often fall prey to a bias called mental accounting, where we sort our money into different “accounts” and so treat each group of money differently. In a particular case study, researcher Richard Thaler, the person attributed to the concept of mental accounting, found that people are more likely to spend a small inheritance and invest a large one. Factors such as where the money came from or its intended use influence how it’s spent (or saved), but a dollar that you are given should be treated just the same as a dollar that’s earned.
