How to Preserve and Maximize Your Inheritance for Long-Term Security

Receiving an inheritance can be a life-changing event, offering you the chance to secure your financial future. However, studies show that many Americans who receive an inheritance often spend the majority, or even all, of the funds within a few years. For example, about one in five baby boomers who received an inheritance of $100,000 or more spent it entirely. To avoid this fate and ensure your inheritance works for you long-term, there are a few essential steps to take. At Zeus Estate Planning, we’re here to help you make the most of your inheritance and secure your legacy.

1. Don’t Rush into Major Decisions

When you receive an inheritance, resist the urge to make immediate financial decisions. Instead, take time to create a well-thought-out plan for your future. Here are a few initial actions you can take:

• Park the funds in a safe place, such as a savings account or money market account, while you consider your next steps. Remember that FDIC insurance covers accounts only up to $250,000 per depositor per bank, so be mindful of where you place larger sums.
• Establish or bolster an emergency fund. If you don’t already have one, set aside enough to cover at least six months of expenses. If you already have a fund, consider increasing it to cover up to a year’s worth of expenses.
• If you are married, decide early whether to keep the inheritance in your sole name or in a joint account with your spouse. This decision could impact whether the inheritance is considered a marital asset in the event of divorce. In many states, even keeping the inheritance in a sole account but using it for joint expenses could turn it into a marital asset. Legal advice from an estate planning attorney is key here, and Zeus Estate Planning is ready to assist you in protecting your assets.
• Gifting to children or loved ones? Be mindful of potential gift tax or negative tax consequences. We can help you structure gifts properly to avoid any pitfalls.
• If you have significant debts or liabilities, using part of your inheritance to pay down those obligations may be a smart financial move.

2. Maximize Your Retirement Savings

If you’re still working, your inheritance offers a unique opportunity to boost your retirement savings. Financial experts often recommend having at least one year’s salary saved by age 30, three times your salary by age 40, and eight times your salary by age 60 to ensure a comfortable retirement. Use your inheritance to help you reach these benchmarks:

• Increase your 401(k) contributions. If you’re not already maxing out contributions, now is the time to do so—especially if you aren’t taking full advantage of your employer’s matching contributions.
• Consider funding an IRA, particularly if your employer doesn’t offer a 401(k). However, keep in mind that if you inherit a traditional IRA, any withdrawals will be taxed as part of your income. Proper planning can help you avoid unnecessary tax liabilities.

3. Build a Team of Advisors

To make your inheritance last, surround yourself with a team of trusted professionals:

• Financial advisor: They can help you create a plan that addresses your current needs—like managing investments and credit, saving for college or retirement—and your future goals, like purchasing a home or establishing a charitable foundation.
• Insurance agent: Ensure that you have the right types and amounts of coverage, including life, long-term care, and liability insurance, to protect yourself and your family.
• Tax professional: They will help you minimize capital gains and other taxes, ensuring that you retain as much of your inheritance as possible.

At Zeus Estate Planning, we specialize in estate planning services to protect your inheritance from creditors, lawsuits, and excessive taxation. We’ll help you create or update essential documents like wills, revocable trusts, medical directives, and powers of attorney. If you’re interested in creating a gifting strategy or building a family legacy, our team is here to guide you through these complex processes.

Let’s Secure Your Financial Future Together

A well-structured plan can help your inheritance last a lifetime—and beyond. At Zeus Estate Planning, we’re here to help you make informed decisions about receiving, growing, protecting, and passing on your inheritance. Our experienced team can work with you to create a comprehensive estate plan that aligns with your financial goals and secures your family’s future.

Visit zeusestateplanning.com or call us at (917) 515-1825 to schedule a consultation. Let us help you safeguard your inheritance and create a lasting legacy.