Savvy Strategies for an Inheritance

by: Laura (Ciarkowski) McCarron
Director, Value Add Marketing, MainStay Investments

Personal loss is never easy. The death of a loved one can be one of the most emotionally trying periods in one’s life. And it is not uncommon for heirs to experience mixed emotions after receiving an inheritance—especially when it is unexpected. Many feel anxiety, stress, or even guilt over financially benefiting from a loved one’s death.

The funds were likely intended to bring a degree of financial security. But, because many do not know how to appropriately handle a sudden, large sum of money, some may find themselves financially worse off than before their inheritance. Heirs can stay in the right frame of mind after receiving a sizable amount of money with these tips

How to Handle an Inheritance

• Avoid rash, knee-jerk decisions. It is a common occurrence for heirs to spend an inheritance in a few short years because the funds may be viewed as “found money.” With an inheritance, the goal should be to realize the optimal long-term value and not use it to fund a shopping spree.
• Develop a strategy. If possible, consider doing nothing with the new funds for a set period of time—perhaps six months to a year—while carefully assessing one’s financial situation and researching options. It is important to resist the feeling of “having to” do something with the money right away.
• Distinguish between wants and goals. Spend time setting solid financial objectives and understanding how the inheritance can be used to help achieve those objectives. A good way to do that is to ask what the money should accomplish, not what it should be spent on.
• Don’t forget about the inheritance tax. Once the executor of the estate has divided up the assets and distributed them to the beneficiaries, a state inheritance tax may come into play. The beneficiary of the money or property is responsible for paying the inheritance tax, not the estate, so it is important to understand the rules of your state. Depending on an heir’s relationship to the deceased, an exemption or reduction in tax may be granted.

Whether expected or unexpected, losing a loved one is never easy. A trusted financial professional can be a valuable partner when it comes to navigating complex administrative and financial matters during a personally difficult time. He or she can also help heirs establish or realign their financial strategy and outline sound options for an inheritance.

Neither New York Life Investment Management LLC, its affiliates nor representatives provide tax, legal, or accounting advice. Please contact your own professionals.

The information and opinions contained herein are for general information use only. MainStay Investments does not guarantee their accuracy or completeness, nor does MainStay Investments assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. There can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Past performance is no guarantee of future results.

All investments are subject to market risk, including possible loss of principal. Diversification cannot assure a profit or protect against loss in a declining market.

Securities distributed by NYLIFE Distributors LLC, 30 Hudson Street, Jersey City, NJ 07302, a wholly owned subsidiary of New York Life Insurance Company. NYLIFE Distributors LLC is a Member FINRA/SIPC.

MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. This material is provided as a resource for information only. Neither New York Life Insurance Company, New York Life Investment Management LLC, their affiliates, nor their representatives provide legal, tax, or accounting advice. Please remind your clients to consult their own legal and tax advisors before implementing any plan.

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