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How to Manage an Inheritance

Receiving an inheritance can be both a joy and a significant responsibility. Even if you suspect that a family member may include you in their last will and testament, there are several aspects of inheriting wealth that you may not have taken into consideration. Below, we have created a list of a few factors worth considering if you find yourself in the position of managing an inheritance.

Here at GDS Wealth Management, we are happy to be able to share the following information regarding inheritance management. However, please keep in mind that this blog post is intended for informational uses only. We advise that you consult with a legal or tax professional before making any decisions regarding your inheritance. If you have any questions about the content discussed below, please feel free to contact our team. We are here to help in any way we can.

Move at your own pace. Allow yourself ample time to process your emotions. You may need time to grieve before making any significant decisions, and this is completely normal. Many of the decisions regarding your inheritance can likely wait until you are emotionally ready to proceed, and taking this time for yourself may help you make more well-informed choices once some time has gone by.

Don’t navigate this alone. Managing the complexities of an inheritance can be overwhelming. Seek the guidance of an experienced professional who can provide valuable knowledge regarding potential laws, choices, and pitfalls before making any decisions.

Consider your family. Receiving an inheritance can significantly alter your financial strategy, so it is important to take this into account when making decisions.

Don’t forget about taxes. Be aware of potential tax implications that may arise. If you have inherited an Individual Retirement Account (IRA), it is crucial to understand the tax rules. As per the SECURE Act, distributions to non-spouse beneficiaries are generally required to be made within ten years following the account owner’s death.

It’s important to note that the new rule regarding non-spouse beneficiaries and IRA withdrawals does not mandate taking withdrawals within the ten-year period. However, it does require that all funds be withdrawn by the end of the tenth calendar year following receipt of the inheritance. Certain exceptions to the rule may apply to surviving spouses, disabled or chronically ill individuals, individuals who are not more than ten years younger than the IRA owner, and minors who are children of the IRA owner.

Keep yourself informed. Estate laws have undergone numerous changes over the years, and what you previously believed to be accurate may no longer be true.

Do what’s best for your situation. While emotions may influence your decision-making process, it is essential to assess whether the inherited wealth aligns with your specific financial goals. Seeking assistance from a financial professional can help to determine if the inheritance aligns with your overall risk tolerance, goals, and time horizon.

Glen D. Smith, CFP®, CRPC®
Chief Executive Officer | Chief Investment Officer | Founder

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