Managing an Inheritance

Where to begin?

The death of a spouse or loved one is both stressful and confusing. It’s not only a difficult time emotionally, but there are also legal and financial issues to be dealt with—many right away.

What’s more, the decisions you make could affect the rest of your life. That’s why we encourage you to find a few quiet moments to deal with the “priority issues.” Addressing these first can help protect you, and may make a difficult time a little less difficult.

Deal with the “priority issues” first

While there are certain to be a number of concerns that will require your immediate attention, taking care of your current needs should come first:

  • Determine your immediate cash flow needs
    How much money will you need to meet your ongoing living expenses? This is especially important if you relied on the deceased’s income prior to his or her death.

    Proceeds from a life insurance policy are designed to assist with these expenses, so if you are named as a beneficiary this can help pay off debt, keep your bills current, and maintain your credit rating and financial integrity.

  • Determine your ongoing sources of income
    These can include:
    • Income you earn from a job
    • Social Security (yours or the deceased’s)
    • Pension benefits (yours or ongoing payments from the deceased’s former employer)
    • Income from a trust
    • Annuities
    • Life insurance proceeds
  • Inform the deceased’s employer and other financial institutions
  • Contact your bank and other financial institutions
    If you and the deceased shared joint bank accounts, you may be temporarily unable to draw funds from these accounts until your bank has received clearance from state tax authorities. It shouldn’t take more than a few hours, but be aware that some banks will stop payment on checks following publication of a death notice.
  • Gather important documents
    This includes copies of the will, insurance policies, birth, marriage, and death certificates, and copies of real estate deeds.
  • Contact an attorney
    If you don’t have an attorney, you may want to ask a close friend, business associate, or trusted advisor to recommend one.

Last, don’t feel pressured, and don’t make any decisions or pay any bills you don’t fully understand.

Next, deal with the long-term issues

The next most important issue will probably be evaluating your current financial situation. To do this, take the following steps:

  • Identify your existing financial assets.
  • Change joint titles of ownership into your name alone.
  • Review your personal insurance coverage to ensure your beneficiaries are current.
  • Make out a new will if your beneficiaries need to change.

Invest wisely

After the short-term and long-term issues have been dealt with, it’s time to make well-informed decisions about how to save, spend, or invest the remainder of your inheritance. While you may feel like treating yourself to things you couldn’t afford before, it’s a good idea to first make sure you have enough money set aside for retirement, a child’s education, and other important life events.

Consider an annuity

An annuity can turn your inheritance into a guaranteed income stream—something you may want to have, especially after the loss of a spouse. Plus, annuities are:

  • Flexible
    There are a variety of options available with different terms, levels of risk, and funding options.
  • Tax-deferred
    You do not pay taxes on your earnings until you withdraw money from the annuity (as long as you are age 59 ½ or older).

Annuities are long-term investments designed for retirement purposes. Early withdrawals may be subject to withdrawal charges. Holding an annuity in an IRA or other qualified account offers no additional tax benefit. Therefore, an annuity should be used to fund an IRA or qualified plan for annuity features other than tax deferral. Optional riders are available at an additional cost. Restrictions and limitations may apply.

Read more about annuities now.

Finally, don’t hesitate to ask for help.

All guarantees are based upon the claim-paying ability of the issuer.

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