Managing an Inheritance

Where to begin?

The death of a spouse or loved one is both stressful and confusing. It’s not only a difficult time emotionally, but there are also legal and financial issues to be dealt with—many right away.

What’s more, the decisions you make could affect the rest of your life. That’s why we encourage you to find a few quiet moments to deal with the “priority issues.” Addressing these first can help protect you, and may make a difficult time a little less difficult.

Deal with the “priority issues” first

While there are certain to be a number of concerns that will require your immediate attention, taking care of your current needs should come first:

Determine your immediate cash flow needs
How much money will you need to meet your ongoing living expenses? This is especially important if you relied on the deceased’s income prior to his or her death.
To help determine this, you can use this worksheet

Proceeds from a life insurance policy are designed to assist with these expenses, so if you are named as a beneficiary this can help pay off debt, keep your bills current, and maintain your credit rating and financial integrity.
Determine your ongoing sources of income
These can include:
- Income you earn from a job
- Social Security (yours or the deceased’s)
- Pension benefits (yours or ongoing payments from the deceased’s former employer)
- Income from a trust
- Annuities
- Life insurance proceeds
To help calculate this, use this worksheet
Inform the deceased’s employer and other financial institutions
Use these sample letters to begin this process
Contact your bank and other financial institutions
If you and the deceased shared joint bank accounts, you may be temporarily unable to draw funds from these accounts until your bank has received clearance from state tax authorities. It shouldn’t take more than a few hours, but be aware that some banks will stop payment on checks following publication of a death notice.
Gather important documents
This includes copies of the will, insurance policies, birth, marriage, and death certificates, and copies of real estate deeds.
Contact an attorney
If you don’t have an attorney, you may want to ask a close friend, business associate, or trusted advisor to recommend one.

Last, don’t feel pressured, and don’t make any decisions or pay any bills you don’t fully understand.

Next, deal with the long-term issues

The next most important issue will probably be evaluating your current financial situation. To do this, take the following steps:

Identify your existing financial assets.
Identify your current liabilities
Calculate your ongoing monthly living expenses.
Change joint titles of ownership into your name alone.
Review your personal insurance coverage to ensure your beneficiaries are current.
Make out a new will if your beneficiaries need to change.

Invest wisely

After the short-term and long-term issues have been dealt with, it’s time to make well-informed decisions about how to save, spend, or invest the remainder of your inheritance. While you may feel like treating yourself to things you couldn’t afford before, it’s a good idea to first make sure you have enough money set aside for retirement, a child’s education, and other important life events.

Consider an annuity

An annuity can turn your inheritance into a guaranteed income stream—something you may want to have, especially after the loss of a spouse. Plus, annuities are:

Flexible
There are a variety of options available with different terms, levels of risk, and funding options.
Tax-deferred
You do not pay taxes on your earnings until you withdraw money from the annuity (as long as you are age 59 ½ or older).