Baby boomers are set to inherit up to $8.4 trillion over the next 15 years, according to The Center for Retirement Research at Boston College.

A recent New York Times article explored the complicated issues that these inheritances can bring, including transferring the emotional attachment you had to your parents to what they have left you.

The Times article found that some boomers tend to get “stuck” when deciding what to do with their inheritance, letting large sums languish in low interest accounts for years. Others use the windfall to open their lives up to new possibilities, like starting a business or even retiring.

Whether you are a boomer or not, there are things you should do right now.

Here are some tips on how to plan for an inheritance:

1. Create your own estate plan first.

You may be expecting an inheritance, but no one knows what the future will bring so create your own estate plan first.  Part of your estate planning should also include a prospective plan for your future inheritance.

2. Do some tax planning.

Inheritances can include cash, property, a valuable collection, investments or real estate, so the assets contained within your inheritance need to be examined for potential tax liability.

3. Have a conversation with your parents about their plan.

Depending upon your relationship with your parents, you may want to have a frank discussion about their plan. Do they have a trust? Will their estate go through a lengthy, public and expensive probate court proceeding? Have they considered setting up a Lifetime Asset Protection Trust for their beneficiaries which would protect the assets from creditors for life?

This is a delicate area and these conversations are often avoided for fear of appearing insensitive or even greedy. It may be helpful if these conversations are based on how to ensure that your parents’ legacy will not be spent on probate fees, estate taxes or lost to creditors, but rather how it will benefit future generations. This is what a true legacy is about.

4. Look to the future.

Many recipients feel an obligation to protect the inheritance for their own children, while others may have charities or other plans for what remains after they are gone. Your own estate plan should address ways to protect and pass on your assets in the most tax-advantaged way possible.

Financial experts advise that one should not just sit on an inheritance, but instead explore ways they and their loved ones can best benefit from it.

Inherited money should not be treated as a memorial; instead, use it as your parents no doubt intended it – as a way to make a better life for yourself and your family.

CLICK HERE to learn more and to schedule your Family Wealth Planning Session with Jill Gregory.

Share This