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Wealth Management: How to Handle an Inheritance of Any Size

by Caldwell Trust

Reports show that since the recent financial crisis, fewer Americans expect to receive any sort of inheritance from their parents or other family. But according to researchers at Ohio State University, studies show that elderly Americans are expected to transfer almost $4 trillion to their heirs over the next 10 years. So what does one do if such wealth is received?

Resist the Urge

WiseGeek contends that “the best use of your inheritance money depends on your current financial situation and the amount of resources that you already have.” But in any case, it’s important to resist the desire to blow it on impulse purchases. It might be exciting at first, but you’ll most likely end up right back where you were before.


Reduce Big Expenses

Instead of spending a large portion of your inheritance on things that provide temporary pleasure, consider putting some it toward things that can have a lasting impact. Debt reduction is one option. Putting a significant principal payment (or down payment if you don’t currently own) on a mortgage is another. The main idea is to use the money as a tool to increase your financial security moving forward.


Save for the Future

The future always provides surprises, so it’s important to put yourself in a position to be prepared for them. Experts generally recommend to put have enough in a liquid savings account to cover three to six months’ worth of expenses to be used in the case of a job loss or short-term disability. Looking a little further into the future, consider increasing your contributions to your IRA or 401(k) for retirement, or even a 529 college savings plan for your children or grandchildren.


Invest to Sustain and Grow

In all of this, your overall goal should be to sustain and grow the balance of your inheritance. Investing a portion of it can help you reach that goal. As mentioned, saving for retirement or your children’s future education can do that. But also consider using a financial adviser who can help you use other investment vehicles to keep your windfall more than a fleeting memory.
Remember, there is nothing wrong with enjoying some of the money you have received. After all, it is yours to use wisely. However, the reward will be much sweeter if you put your long-term plans in place first and let the money work for you.


Caldwell Trust Company

Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently manages over $800 million in assets for clients throughout the United States. The company offers a full range of fiduciary services to individuals, including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers. 

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