What to Do When You’ve Inherited Wealth

fortpitt in Wealth Management 19 September, 2023

Inheriting often causes a mixture of emotions because you’ve lost a loved one and received a parting gift. Beyond feelings, there are several intricacies surrounding inheritance, including paying taxes in certain situations, deciding what to do with what you inherited and honoring the memory of a loved one. Making these decisions can be particularly challenging during times of loss, so knowing what to do when you’ve inherited wealth ahead of time is helpful.

What to Do With an Inheritance

Knowing how to invest your inheritance is something you need assistance with. An advisor with no incentive to push specific portfolios or products will help explain your options and any tax implications there may be. A few crucial points to consider include:

  • Avoid assumptions: Never assume you will inherit. People may deplete their wealth by paying for medical expenses or donating more to charity. Be prepared for but not dependent on inheritance.
  • Take time: When inheriting large amounts of cash, take your time when deciding what to do with it. What values, interests, and ideas did the deceased have? Can you use that money to honor their memory?
  • Park the cash: Generally, making fast decisions with an inheritance is inadvisable. Place the sum in a federally insured bank or credit union account — a safe place to keep it while you think and grieve.
  • Pay off high-interest debts: A wise decision for using your inheritance is paying off credit cards and other high-interest debts. Doing so can help you get a fresh start with less — or no — debt.
  • Tax implications: Generally, you won’t need to pay taxes on the cash you inherit. Other inherited assets, like real estate, retirement accounts, and securities, may have tax implications.

Investing Your Inheritance

You can save, spend, donate, or invest money you inherited. If you obtained a property, like a home, you can sell it, rent it out, or live there. However, your choice may have tax consequences. If you sell a home, you will need to pay capital gains tax on the difference between what the house was worth at the time of the person’s death and what the property is worth at the time of sale.

An investment advisor can help you maximize your inheritance, inform you of tax implications, and give investment advice.

Speak With an Investment Advisor at Fort Pitt

At Fort Pitt Capital, we are transparent, service-oriented, and professional in what we do. Our investment advisors can guide you through inheritance’s intricacies, helping you make wise decisions for the future.

Learn about our individualized services or schedule a free consultation.

Join Our Newsletter

Receive updates from our blog, retirement plan industry events & news, media appearances, and the latest on Fort Pitt events.