Getting money from a loved one can be great financial support for someone, but it can also raise plenty of questions for that recipient about the best way to handle it.
If you already have a financial plan set up, you’re likely saving for your own emergencies and retirement. An inheritance could help to supplement that.
It is usually not wise to rely entirely on the possibility of inheritance as your retirement plan or as a solution for paying off debt. This is because receiving an inheritance is never guaranteed, and typically, the amount that is gifted to others in an inheritance is not enough to fund a substantial retirement.
However, statistics do support that most Americans will receive some type of inheritance throughout their lives, and it can be a good way to supplement your own retirement savings. If you already know, for example, that you will receive an inheritance, telling your financial advisor about this puts you in a good position to know what to do with the money when you receive it.
If the person who has architected the inheritance has done the right planning, the best part of receiving these funds is that it may be tax-free. You’ll need to consult with a financial professional if you’re thinking about leaving behind an inheritance to someone or if you are scheduled to receive an inheritance and are concerned about the estate tax implications.
Contact a qualified estate planning lawyer and consider involving other financial professionals in your strategy for handling these complex situations. While receiving an inheritance can be a significant financial boon to you, knowing what to do and how to plan for it can be challenging.