Thursday, February 20, 2014
Inherited money has its own unique challenges. Here are six tips for how to spend and save an inheritance:
- This money is different. Recipients of an inheritance may treat an inheritance different from other money. A conflicted relationship with the deceased may cause the recipient to disown the money or waste it away.
- Wait to spend. Estates can take a long time before they’re settled. Recipients should wait until the money is in hand before they go spending it.
- Write a wish list. A wish list allows a recipient to prioritize the may options newfound wealth brings while also giving them time to consider the most meaningful uses.
- Get insured. Besides car and house insurance, a personal liability policy is likely a necessity. Recipients should buy coverage for as much as they are worth.
- Follow the 10% rule. Don’t spend more than 10% of an inheritance. Invest the rest.
- Consider ongoing costs. Ferns require daily watering, while a cactus can go a month without. A new BMW might sound nice, but the insurance premiums, maintenance costs, and gasoline should also be considered. Think about a family vacation instead.
See Robert Pagliarini, 6 Tips to Spend Your Inheritance, Wealth Management, Feb. 14, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.