How can you steer through the grief of inheritance?

Losing someone you love is painful, but expert help and a clear path for making financial decisions can help you become the best steward of money.  

30 Jun 2016

When you grieve, the world grinds to a stop. Just getting through the day may take all of your energy. Grieving takes time and it comes in waves. Yet, when your loss comes in tandem with an inheritance, you may be called upon to make financial decisions when you’re emotionally vulnerable. A bequest intended as a gesture of love can evoke feelings ranging from gratitude to guilt to confusion about the absence of someone you cherished and the responsibilities of new wealth.

Understandably, your first desire may be to put off financial considerations. For some decisions, time and patience may indeed be the wisest course. Still, “There are some time-sensitive things that you have to stay on top of and do,” says Emily Brunner, Wealth Strategist, UBS Advanced Planning Group. A few crucial steps can help protect your wealth and your loved one’s legacy. Speaking with your Financial Advisor can help you determine your priorities. The process of separating the decisions you need to make now from those that can wait may offer a sense of clarity when you need it most.
 

Key takeaways

  • When you receive an inheritance, one of the first steps is to seek help from tax and legal specialists, your Financial Advisor and other experts.
  • Think about steps you need to take now, versus decisions that can wait.
  • Speak with your Financial Advisor about how your inheritance may impact your existing financial strategy.
  • Give yourself time to develop a formal plan for philanthropy.

Find support

“Really, the first thing to think about is guidance,” says Brunner. “You don’t need to do this all by yourself.” While much depends on your inheritance and whether you have a role as executor in the estate, experts to consult early on may include an attorney versed in estate administration, an accountant and your Financial Advisor, Brunner says. “They’ve been through this before, and they know what to expect. They can help you create a road map for the future.”    

If you are executor, one of the key tasks your advisors can help with is collecting and organizing all of the information about the estate, financial and otherwise. Although estate taxes generally aren’t due until nine months after a person’s death, collecting relevant information should start sooner, as it may take time and patience to amass everything you need. Some examples: You’ll want to know about insurance policies, pension plans, real estate holdings and retirement accounts from jobs your loved one may have held many years ago.

Assess your financial picture

A more long-term action to consider is how the inheritance will affect your personal finances. “You’re going to want to add your inheritance to your financial plan and see what the impact will be,” Brunner says. A large inheritance could make it possible to do things that were out of reach before or to approach your goals in a different way, so it’s important to reevaluate your plans for education, retirement and other objectives in light of what has changed. Your Financial Advisor can help you explore the possibilities and help you make any adjustments that are needed.

Since a large inheritance is also likely to change your tax picture, your Financial Advisor and tax specialist may be able to suggest ways to invest in a tax-efficient manner.

Give yourself time where you need it

Even as you take care of these immediate concerns, it’s just as important to give yourself the necessary time to think through larger issues. Say your inheritance includes a home. Keep in the family or sell? You should take immediate steps to ensure that the home is properly maintained and make sure you don’t miss property taxes or other deadlines. But you might give yourself a year or more to decide whether to sell, factoring in what your loved one desired and what the property means to you.

 

At an emotionally vulnerable time, a person who has inherited wealth may be inundated with requests from philanthropic organizations or from friends and relatives hoping for financial help. Given time and emotional distance, you and your advisors can devise a formal approach that reflects how you want to approach philanthropy and gifts.

 

Sometimes, you may need a year or so just to become comfortable with what it means to have the wealth, says Thayer Willis, author of the book Beyond Gold: True Wealth for Inheritors. Willis, a counselor and therapist who works with wealthy families, recalls a young woman who was “literally a starving artist, living hand to mouth.” When her father died, leaving her an inheritance, “her whole identity was challenged,” Willis says. She worried about everything from what to do with the money to how it would affect her relationships with her friends, most of whom were also starving artists.

 

Over time, her fears eased. She realized that the inheritance did not have to disrupt her artistic career. She used a portion as a down payment for a house—something she’d never owned—with space to continue her work. “She was able to get herself re-oriented and see this as a gift in her life and something that her father had done for her that she really valued,” Willis says.

 

You’re likely not a starving artist, but the key insight here—with time comes perspective—applies to almost everyone who, through sudden loss, may find new possibilities.