Receiving an inheritance can be an extraordinary opportunity for financial security, but it also comes with important decisions and responsibilities. Whether you’ve received a substantial amount or a modest inheritance, careful planning is essential to ensure your newfound resources support your goals and last over the long term. Studies show that a significant portion of inheritances are spent quickly, with some people seeing little or no increase in wealth after receiving one. If you’re preparing to receive or have just received an inheritance, these steps can help protect and extend its value for the future. 

Take Time to Plan Before Making Major Decisions

Receiving an inheritance can be both exciting and overwhelming. Taking the time to develop a thoughtful financial strategy ensures your inheritance is used in ways that align with your future goals. Consider these initial steps while planning:

1. Set Aside Funds Safely – Safeguard your inheritance by placing it in a secure account, such as a high-yield savings account or a certificate of deposit (CD). This will protect your funds while you evaluate long-term options. Be mindful of Federal Deposit Insurance Corporation (FDIC) limits, which provide coverage of up to $250,000 per depositor per bank.
2. Build an Emergency Fund – If you don’t have an emergency fund, use part of your inheritance to establish one that can cover at least six months of living expenses. If you already have a fund, consider increasing it to cover up to a year’s expenses for added security.
3. Consider Marital Status and Account Ownership – Decide whether to keep the inheritance in your name or in a joint account if you’re married. Funds kept in your name may be protected in case of divorce, but using them for joint expenses could affect this protection. Legal advice is essential to navigate these choices.

Engaging a qualified Estate planning attorney can help you structure your inherited assets to fit within your overall financial plan effectively.

Prioritize Retirement Savings if You’re Still Working

An inheritance can be a valuable tool to bolster retirement savings. Experts recommend aiming for savings benchmarks by age to ensure financial stability in retirement. If your retirement savings need a boost, consider these steps:

1. Max Out Contributions – Use your inheritance to maximize contributions to your 401(k) or IRA, especially if your employer offers matching contributions. This approach can help grow your savings while benefiting from tax-deferred growth.
2. Understand Inherited IRA Rules – If you’ve inherited an IRA, be aware of potential tax implications. Proper planning of distributions can help reduce taxes and preserve your inheritance.

Build a Team of Trusted Advisors

Making your inheritance last often requires expert guidance. Consider assembling a team of advisors to support your financial goals:

1. Financial Advisor – Work with a professional to create a personalized financial plan, manage debt, and invest wisely.
2. Insurance Agent – Assess whether additional insurance coverage is needed to protect your growing assets and ensure family security.
3. Tax Professional – Minimize tax liability by consulting a tax advisor about capital gains, inheritance taxes, or gift taxes.
4. Estate Planning Attorney – At Lumsden Law, we specialize in safeguarding inheritances. We can help you create or update your estate plan, set up trusts, and protect assets from potential risks.

Consider Legacy and Charitable Goals

If leaving a legacy or supporting charitable causes is important, your inheritance can help you achieve these aspirations. Setting up a trust can provide financial support to loved ones or your chosen charitable organization. At Lumsden Law, we can help design an estate plan that honors your wishes, reduces taxes, and achieves your philanthropic goals.

We’re Here to Help You Preserve Your Inheritance

An inheritance is both an opportunity and a responsibility. At Lumsden Law, we’re committed to helping you preserve and grow your wealth while supporting your financial and personal goals. Let us guide you in creating a secure, lasting legacy for yourself and your loved ones.

Schedule a Consultation Today

To learn more about how we can assist you, contact Lumsden Law Firm to schedule a consultation. Together, we’ll turn your inheritance into a foundation for long-term financial security and success.