Losing a loved one can be a devastating experience for people across Los Angeles. And if that person has taken steps to set up an estate plan that makes certain financial allowances for you and others, friends and family members generally want to make sure that those wishes are respected and carried out. But knowing what to do with an inheritance can be more difficult than many people may realize.
An inheritance can provide a person with economic security, new opportunities or comfort in holding on to something that has emotional value. But all these choices could create a sense of confusion, anxiety and guilt. After receiving an inheritance, many people wonder what they are supposed to do with the gift.
There are three different ways that people typically approach the receipt of an inheritance:
- They want to spend it: Receiving a large sum of money can be exciting. People who may have been struggling financially could now have the freedom to move to a better home, change jobs or indulge in travel, luxury items and things they could never have purchased without an inheritance.
- They want to save it: People who see the inheritance as still belonging to a passed loved one may want to save what they have received. Whether it is a home or money, people who have emotional ties to or feel responsible for maintaining these assets can have trouble letting them go or using them in a different way.
- They want to invest it: Instead of spending or saving an inheritance, some people want to take the money and make it work for them now and in the future. Some people use an inheritance to purchase real estate or make more aggressive investment decisions. People who do this may want to extend the life of an inheritance and add to it so that they can pass it on to their children in the future.
It is not always easy for people to know what to do with an inheritance once they have received it. That is why people who plan to leave an inheritance may want to consider discussing it with intended heirs or including some guidance in the estate plan. Opening up communication can give people the chance to talk about what the intent of the gift may be and to get a sense of approval from the person leaving the inheritance.
Source: International New York Times, “When Boomers Inherit, Complications May Follow,” Fran Hawthorne, Feb. 10, 2014