You’ve Received an Inheritance, Now What?

This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article providing suggestions that could help manage an inheritance:

If you’ve recently received an inheritance, you may be facing many important decisions. Receiving an inheritance might promote spending without planning, but don’t make any hasty decisions.

Identify a Team of Trusted Professionals

Tax laws can be complicated, so you might want to consult with professionals who are familiar with assets that transfer at death. These professionals may include an attorney, an accountant, and a financial and/or insurance professional.

Consider Tax Consequences

While you might not owe income taxes on the assets you inherit, your income tax liability may eventually increase, particularly if the assets you inherit generate taxable income. For instance, distributions you receive from inherited tax-qualified plans such as 401(k)s or IRAs will likely increase your taxable income.

Also, your inheritance may increase the size of your estate to the point where it may be subject to state and/or federal transfer (estate) taxes at your death. You might need to consider ways to help reduce these potential taxes.

How You Receive your Inheritance Makes a Difference

Your inheritance may be received through a trust, in which case you’ll receive distributions according to the terms of the trust. You might not have total control over your inheritance as you would if you inherited the assets outright.

If you inherit assets through a trust, it’s important that you familiarize yourself with the trust document and the terms…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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