For most people, finding a penny heads up means good luck. On the contrary, if it’s a penny with the tails side up it should be turned over for another person to find. This, as it’s believed, brings good karma and in turn will come back to the do-gooder who turned that coin into a “Lucky Penny”. My grandfather taught me when you find any change, it’s the easiest money you’ll make all day, and heads up or down, a penny saved is a penny earned.
Regardless of what you believe, found money is always a good thing. When it comes to a windfall like an inheritance, there’s no question that you will be keeping it. The only question is what to do with it when one comes your way.
Here are 4 steps to managing a windfall:
1. BE PATIENT & SILENT: When you receive an inheritance of value the best thing to do is shut up and be patient. Waiting a few weeks before making any big decisions regarding your windfall will give you a chance to collect your thoughts and remove your emotions before taking the next steps. It’s also smart to not share the news of your inheritance with friends or family during this grace period either. Acquaintances can sometimes get weird when they find out you’ve just come into money and their influence may not be in your best interest. Be patient and silent while you prepare to set a plan in motion.
2. CONSULT WITH A PROFESSIONAL: A windfall needs to be managed appropriately, especially while settling an estate and transferring assets into your name. You wouldn’t call a plumber to do electrical work so don’t get out over your skis by trying to manage a large inheritance on your own. A fee-based financial advisor who acts in a fiduciary capacity can help navigate you through the intricacies of your inheritance. It is important that new accounts are established properly and that you discuss the specific tax strategies for your personal situation. In some cases, you may want to consider hiring an estate planning attorney to help with probating the estate.
3. SET YOUR PLAN IN MOTION: Once your inheritance is in good order and the estate has been settled, it’s time to shift gears and create a plan to help achieve your goals. You may have some debts that you want to payoff. You might have inherited an IRA that you want to earmark for your own retirement. It’s important to customize your plan. An IRA that was inherited from an elderly relative probably needs to be re-allocated to align with your goals. Understanding how each part of your windfall fits into your plan is vital to making sure your inheritance improves your financial well-being.
4. PROTECT YOUR LEGACY: A crucial part of your plan is making sure your windfall is protected should anything happen to you. Protect and grow your legacy by putting an estate plan in place that is in line with your goals.
So if it’s your “Lucky Penny” day, make your windfall matter by being patient when planning, consult with an advisor who can navigate the intricacies and work in your best interests , put your plan in motion, and protect your legacy by putting a thorough estate plan in place.
A.J. Vignola is a Financial Advisor at King Financial Network. He is devoted to making sure the customer is satisfied and always acts in their best interest first. At KFN, A.J. collaborates with the unique and extensive network to analyze and strengthen strategies for each client's financial goals.
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