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    You’ve inherited a large sum of money … now what?

    You’ve inherited a large sum of money … now what?

    Financial Planning

    Consider this fact: Nearly $30 trillion will pass from one generation to the next during the next 30 years, according to a recent study by Accenture. Could you be one of those coming into a significant inheritance? And, if so, do you know how best to handle the wealth?

    If a family member bequeaths a large sum to you, consider depositing it in a money market fund or certificate of deposit while you mull your options. These vehicles are liquid, meaning you can easily withdraw the funds once you know how you’d like to invest long term. Because FDIC insurance limits for interest-bearing accounts are $250,000 per depositor at each financial institution, you may need to spread the money among multiple banks to protect yourself.

    As you consider ways to spend and invest your inheritance, consult your financial advisor. Why? A large influx of cash can greatly alter your financial situation and thus the strategies that are appropriate for you. For example, you and your advisor may decide to change your focus from capital appreciation to capital preservation and income.

    Before getting too excited about the size of your inheritance, don’t forget about Uncle Sam. If you’re inheriting a large estate, federal and state estate taxes might take a big bite.

    But the tax news isn’t all bad. If you’re inheriting securities, you can benefit from the step-up in basis rule: Your tax basis in the shares will be based on their value on the day you inherit them. So if you then sell the shares, you won’t owe income tax on any capital gains earned while your loved one held them.

    Finally, if you have minor children, consider creating trusts to provide for them in the event of your untimely death. You’ll gain peace of mind that their finances will be managed by a competent financial professional or trusted family friend.


    The information provided is not written or intended as specific tax or legal advice. Our employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.

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