Building Your Life with Inherited Wealth

A wealth transfer can provide a lifestyle headstart most only dream of. It can also pose a set of challenges you will want to handle wisely, right from the beginning.
If the funds are already a part of your life and being transferred in name only, you will want to consider the obvious: tax planning, investing and insurance safeguards.
But you may also be taking over business responsibilities. Maybe family members won’t all agree on the distribution, or how to manage the money. Who to trust and confide in may become an issue.
However, if the wealth is a dramatic shift for you, there are other factors to consider.


Avoiding “Sudden Wealth Syndrome”

What if you had no idea this money was coming your way? We’ve all heard of those who come into a huge sum of money and within a few years are right back where they started (or worse).
Our first advice is to consider a few tips:

  1. Consult with a financial professional and a tax advisor. The type of inheritance (life insurance, retirement account, business holdings) makes a huge difference in how you navigate what to do.
  2. Park it. Before making any plans or big purchases, keep it safe. But where? In a joint account with your spouse? Inheritances may be considered separate property in the event of a divorce, but that protection evaporates once it goes into a joint account.
  3. Pay down debt. Consider where to start based on the highest interest rate, and whether your mortgage brings you tax deductions if left in place.
  4. Plan for emergencies. Good luck doesn’t last forever, so leave enough in an emergency account to fund at least six months’ of living expenses, just in case.
  5. Don’t quit your job. Unless you receive many millions of dollars, ceasing your livelihood will only guarantee that you blow through the money faster. Even with millions, living in luxury vs. investing means it won’t last forever.
  6. Learn to say ‘No’. People and charities may come to you with all sorts of requests, great investment ideas, or even scams. If setting boundaries is hard for you, we can help. Just tell them you would be happy to consider anything after your financial advisor reviews the idea, and then give them our number.
  7. Get clear on goals. Now is the time to focus on the big picture for your life. It can be overwhelming, but the Prosperity Partners Financial Blueprint Process can help you consider:
    • Retirement goals
    • Setting up a trust
    • Funding a charity
    • Helping loved ones
    • Paying for someone’s education
  8. Consider insurance. Do you need insurance for jewelry, artwork, real estate or casualty coverage? Don’t forget a liability policy to keep from falling victim to a costly lawsuit that could take it all away.
  9. Review estate plans. Does the inheritance make your own estate big enough to be taxable to your heirs? What happens to everything if you suddenly pass away?
  10. Splurge a little. It’s not all work! Set aside a small percentage, say 5%, to treat yourself. Maybe a trip, car or special celebration? It all depends on the amount you’re talking about.

* Nothing in this communication should be treated as tax or investment advice. Each individual situation is different. You should confer with your own tax professional.


Envision Your Future

A large inheritance can open up a whole new set of options for your life. While you can’t literally see the future – we can help you envision it. We start by exploring all the possibilities your newfound wealth can potentially offer you. Then we help you in the pursuit of narrowing down those possibilities and turning them into a reality.



Prosperity Partners’ Strategies for Inherited Wealth

The insights you’ll need to confidently oversee your wealth CAN be gained in a matter of months, rather than over a lifetime.

At Prosperity Partners we’re here to transmit to you everything we’ve learned from working with multiple generations of our best clients. This may include:

  • Assembling your financial team
  • Effectively directing others
  • Manage your wealth or delegate?
  • Evaluating investment ideas
  • Dealing with requests from friends

Translate your wealth into a rich and fulfilling life.