February 20, 2023

How to Manage an Inheritance

by Victoria Bulgin

in Financial Planning Lifestyle

Women may be in for double the planning when it comes to managing windfalls.

Inheritances are a blessing that can relieve old debts while opening doors you didn’t know existed. However, as fortuitous as an influx of wealth can be, the emotional and administrative complexities that often come along with sudden wealth can be overwhelming.

According to data from the ONS (Office of National Statistics) women, on average, outlive their husbands. Considering women are also expected to inherit a sizable amount through intergenerational wealth over the next 40 years, it seems likely that many married women may receive not one, but two inheritances in their lifetime – from their parents as well as their partner. So, what exactly does this mean for your life and future?

It would be advisable that you and your partner make a plan – which may help to mitigate some of the stress caused by such an event.  Be sure that there are no gaps in your long-term wealth strategy that could create complications, such as a shortage of liquidity. As always, don’t forget to periodically make sure the details in your estate planning documents are up to date, particularly your beneficiaries.

Mitigate stress by making a plan

If and when you do receive an inheritance, there are several factors to keep in mind as you go about incorporating it into your life and financial plan. For starters, don’t rush to make any decisions. A significant wealth event not only comes with strong emotions but can trigger requests for loans from friends or family or a deluge of unsolicited advice from the well-intentioned. You may even find yourself with an intense urge to give or spend it all at once.

Rather than immediately doing something, set a holding period for yourself – perhaps six or 12 months before you decide what your next move should be. Take this time to think about what’s most important to you and how your new assets might support those goals, whether they involve your career, your family or your community. If you don’t have one already, get a team of professionals in place such as financial planner and solicitor who can work together to ensure all your wealth and life management details are accounted for.

Many women view money as a way to care for themselves and their families. You might see an inheritance as an opportunity to set aside funds for a child’s or grandchild’s education or as a means to help ensure your family’s financial confidence. As you think about your goals for your wealth, don’t forget to take your own longevity into account. Not only do women generally live longer than men, but people are leading longer lives in general, making it an important consideration as you update your financial plan.

Beyond planning for your longevity, it’s important to understand the nuances of significant wealth. For example, while some liquidity can be useful, too much idle cash can be vulnerable to depreciation instead of being thoughtfully invested. Implementing tax-efficient strategies to help preserve your wealth for you and your family is essential.

Whatever life or wealth events might come up, don’t forget that in this situation and countless others, we as your financial planners can serve as a knowledgeable sounding board as you explore your options and prioritise goals.

Source: Women Wealth Manager Network