By Antonio Porretta
We typically think of coming into a lot of money as being good news. But if your windfall is in the form of an inheritance, it can be bittersweet. A variety of emotions could be at war: surprise, overwhelm, hope for the future, sadness. Yes, the gifted money or assets could bring about positive change to your financial situation; but you may be grieving and the inheritance serves as a reminder of the person you lost.
A great way to honor your lost loved one is to use your inheritance wisely. Even if you have good intentions, it’s easy to overlook certain things—especially while grieving. Because the process of accepting an inheritance can be complex, it’s wise to work with a trusted financial professional, someone personalized to walk you through the steps and inform you of things you may not have thought about. If you have received an inheritance (or suspect you will soon), we encourage you to consider the following.
Take a Moment
Before making any decisions about the money, you need to process the loss of your loved one. Failing to deal with your grief can result in emotional spending that compromises the money you’ve just received. If you give yourself some time, you may become more sensitive to your loved one’s wishes or have the chance to clear your head of complex emotions.
If your loved one spent their life building and protecting their wealth, they probably hoped you’d do the same. Letting your inheritance sit for a minute can help you overcome the initial temptation to splurge on something like a fancy vacation or expensive new home. If it’s important to you to honor their legacy, don’t forget to take care of your own emotions to protect the wealth they’ve gifted to you.
Understand the Type of Inheritance You’ve Received
Common types of inheritances include:
- A trust account or cash
- A retirement account such as an IRA or 401(k)
- A house or other property
Knowing and understanding the types of inheritance you’ve received impacts how you access the funds, any taxes associated with it, and what your options are moving forward.
For example, if you inherit a home but don’t want to live in it, you may need to learn more about potential capital gains taxes before deciding to sell the property. If you find that a capital gains tax would be too costly, you might explore another option, such as renting out the house or living in it temporarily as you assess your situation.
Likewise, inheriting a retirement account comes with its own set of considerations, particularly if you inherit the retirement account from a non-spouse. Regardless of the inheritance you receive, it’s best to contact a tax-planning or financial professional who understands the intricacies of inheritance situations.
Take Stock of Your Financial Situation
Once you understand the type of inheritance you’ve received, you’re better equipped to align your plans for the inheritance with your other financial goals, such as:
- Contributing to your retirement account
- Paying down your mortgage
- Saving for your children’s college education
- Giving to a charity or foundation you care about
- Buying a vacation home or taking your family on vacation
Don’t Go It Alone
As with all major financial decisions, consulting a professional is a prudent move when you’re determining what to do with an inheritance. A trusted financial advisor provides experienced and objective advice so you’re not tempted to misuse the money. They can also help you optimize your inheritance for a better financial future.
At Blackbridge Financial, our goal is to develop a holistic plan designed to connect you with your future, and together we can work toward incorporating your inheritance into that plan. If you’re ready to partner with a financial advisor who has your best interests in mind, email me at antonio.porretta@lpl.com or call 704.960.9646.
About Antonio
Antonio Porretta is an independent wealth manager at Blackbridge Financial with over 20 years of experience. He specializes in helping people create, distribute, and preserve their wealth. Antonio received an executive MBA from Saunders College of Business at Rochester Institute of Technology in 2007 and also holds the Accredited Asset Management Specialist℠, AAMS® designation. Originally from Rochester, NY, Antonio has been a resident of Harrisburg, NC, since 2007. Outside of work, he enjoys playing soccer and tennis, coaching, and spending time with his wife, Laura, and their children, Cristiano, Victoria, and Matteo. To learn more about Antonio and how he can make a difference in your financial life, visit www.blackbridgefinancial.com.
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Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance, a registered investment advisor. Independent Advisor Alliance and Blackbridge Financial are separate entities from LPL Financial.