A big inheritance is a new financial opportunity for you and potentially even your family. But costly mistakes could block you from recovering the full range of benefits associated with a major inheritance. Millennials are expected to inherit over $68 trillion by 2030.
And they must be equipped with education and understanding of how to approach this inheritance. There are four things to keep in mind, and you can discuss each of these with our financial team to learn more about what to expect. The first is to be intentional about what you want to accomplish with your inheritance. This could help you pay off your student loans, put a down payment on a home, start a business or save for retirement. For others that could mean paying back all of their debts and getting a financial fresh start. The second thing to consider in receiving a big inheritance is the possible impact of taxes. Whether or not the money that you receive will be subject to an inheritance tax depends on your state and the relationship of the relative.
Only six states in the country impose this tax and so while it is rare, New Jersey is one of them. The next thing to consider is that managing your money should still be an ongoing and top priority. Many people who struggle with financial planning may find themselves in a very difficult situation and may miss out on all of the potential benefits of the initial inheritance received. Most people are not familiar with how to manage money and can make catastrophic mistakes. The fourth thing to keep in mind, and perhaps the most important, is not to spend all of your new inheritance on one thing or at one place.
One study from Slick Deals indicates that Americans admit to spending $7,400 over their personal budget every single year. Uncontrollable spending can have catastrophic consequences. Make sure that you consult with an experienced and qualified lawyer for more help.