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You’ve inherited money…. Now what?

May 16, 2019

Have you ever managed the estate of a loved one or inherited money?

If so, you know that it can be easy to stumble into some snafu's as you are putting your ducks in a row. If things aren't done correctly, these snafu's can cost us extra in taxes, legal fees or just lots of extra time. (And we have SO much of that!)

Because of the complexities of getting it right, this month I've asked a local attorney, Stephanie Dahl to compile a list of top priorities for us to consider when we get the call that we've inherited money.

You've inherited money... Now what?

By: Stephanie F. Dahl, Esq. Dahl Fischer LLC

After the loss of a loved one, that special person gives many individuals one last gift. This often takes the form of a monetary gift. Now that you received this money, what should you do? There are a few steps to take to ensure that the gift you have been given helps you and your chosen beneficiaries for as long as possible.

  1. Speak to a CPA. Not all money passes tax-free to the beneficiary. The source of the money (i.e. life insurance, retirement funds, etc.) will determine whether there will be future tax consequences. It is always important to speak to a tax professional to make sure you do not need to set aside any money to pay taxes the following year.
  2. Speak to a Financial Planner. Whether you are looking to pay off debt, invest or purchase real estate with your inheritance, speaking with a financial planner can ensure you make your money work the hardest for you. A financial planner will educate you on the different places to utilize your money and how to create the best return for you.
  3. Speak with an Estate Planning Attorney. One of the biggest mistakes clients make is not securing their own estate planning documents when they inherit money. Failing to do so, subjects your money to probate, which leaves the money unprotected for your children or future generations.
  4. Make sure your team is talking to one another. It is absolutely imperative that each person on your financial team, your CPA, your CFA and your Attorney, are communicating with one another so that they are all working towards your financial goals.

Some inheritances are large and take extensive planning to ensure multi-generational wealth. Some are smaller, helping to ease the burden for a short period of time. However, at the end of the day it is a gift from someone who loved you, make it work to support your goals the best it can.

Stephanie Dahl is a founding and managing partner at Dahl Fischer, a Colorado law firm focused on serving business owners and entrepreneurs with their business and estate planning needs.