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How to handle a windfall from a California estate

On Behalf of | Oct 25, 2013 | Estate Planning |

A large inheritance received during a time of grief would seem like a great comfort. Without proper thought and consideration, though, that windfall can create more problems than solutions.

If the assets from a generous California will or trust have been passed to you, it’s likely that you have never more wealth at one time in your life. The gift that was supposed to make your future easier is now an enormous responsibility. How do you proceed?

Grief and finances are not compatible. Asset decisions can wait until enough time has passed for you to feel fully competent to deal with the inheritance. Until that day comes, place new money in a safe, not-so-easily-accessible place, like a money market account rather than a tempting checking account.

Professional help can be abundantly useful following an inheritance. Estates planning attorneys and financial advisers have knowledge and skills that can supplement what you already know. Strategies can be designed to preserve the new wealth while meeting your personal goals.

The impact of taxes upon the inheritance and individual assets must be weighed. Figure out what, if any, tax implications exist at federal and state levels. Some states – not California – have inheritance taxes. If your assets originated in one of those states, you may be liable for an unexpected tax payment.

Consult with an expert about paying off your debt. You may be surprised to learn that hanging on to some of it, like a mortgage, may work in your financial favor.

Relatives and friends you never knew you had, investment firms and charities will be attracted to your new financial state. Add them to your plans, if you choose, but make the plan first.

An inheritance can be simultaneously thrilling and daunting. Estate planning lawyers suggest making no rash moves. Wealth brings comfort, but accepting and managing it comes with a learning curve.

Source: redding.com, “Lewis Chamberlain: Coping with an inheritance” Lewis Chamberlain, Oct. 19, 2013