Tips for Navigating an Inheritance

Make the Most of Your Loved One’s Gift by Securing Your Financial Future

Losing a loved one can be an extremely difficult event in your life, and it can be a particularly complex transition to manage if you’ve received an inheritance. While it’s easy to think of an inheritance as positive and life-changing, it’s also common for it to feel burdensome and stressful. Below, we’ll talk through the steps you can take to understand what you’ve inherited and plan for your future.

Understand the Inherited Assets

There are many different types of assets you can inherit, and it’s crucial to evaluate what you now have – and what it means. Different types of assets will come with different types of tax liabilities and responsibilities. Here are a few things to consider:

  • Many people inherit a loved one’s home, and it’s common to sell it right away. In this case, the cost basis on the property is stepped up to a “Date of Death Valuation.” Most often, you won’t be subject to taxes unless you sold the home for a price higher than this valuation.
  • There are step-ups in valuation on other types of accounts, too. For instance, if your inheritance includes a brokerage account, it’s important to understand what stocks, bonds, ETFs, and mutual funds are in the account and how they relate to your personal financial planning needs. This way, you can make a timely sale of assets while the step-up in basis is fresh.
  • Your inheritance might also include one or more retirement accounts, and each may have different rules regarding distributions. Often, there are important differences if you are a spouse versus a non-spouse.

Every inheritance is different, so be sure you fully understand yours.

Carefully Review Your Finances After Your Inheritance

Your loved one’s generosity is certainly meaningful on a personal level, but an inheritance can also infuse a significant amount of capital into your balance sheet. It’s important to get a big-picture understanding of how the inherited assets intertwine with your existing assets.

During this review process, we suggest you evaluate any debts you may have – but refrain from making hasty decisions. It’s common for people who have received a significant inheritance to promptly pay off their mortgage, for example, but this might not be the savviest move you can make especially if you have other high-interest debt to consider. It’s important to review all aspects of your finances before making any decisions about what to do with your inheritance.

Reevaluate Your Investments

During any life transition, it’s a good idea to revisit your overall investment strategy. Think about things like your IRA and any brokerage accounts. Maybe you previously strategized different time horizons based off your needs at the time, but now you need to adjust your investment choices.

We suggest considering these options if your inheritance included a home:

  • Sell the home and use the proceeds to supplement your investment accounts.
  • Turn the home into a rental and utilize the cash flow for your current living expenses or to supplement your nest egg.
  • Cash-out some of the equity in the home, then rent it out. You could use the lump sum to pay down your own mortgage, then use rental income to pay the inherited home’s mortgage and invest any profits.

Ultimately, the goal would be to determine which option will best serve your long-term goals.

Put Together a Plan for Your Financial Future

Whether you had a solid financial plan in place prior to your inheritance or you were lacking a comprehensive strategy, it’s a good time to reassess. Receiving an inheritance can completely change the course of your life, and even cause you to rethink your goals. Things might be possible for you now that was not before. For example, maybe you’re able to retire much earlier than expected or provide a college education for your children and grandchildren. Maybe you can plan that trip you’ve always dreamed about.

Regardless of your specific goals, having a thoughtful plan can be critical. It can help you map out your financial future, address your overall estate plan, identify tax issues to consider, and determine whether you need to utilize any new asset protection strategies.

Overwhelmed By Your Inheritance? We Can Help

An inheritance can truly change your life, but all the steps above can feel overwhelming and confusing – especially when you’re also grieving the loss of a loved one. While you’ve been given an opportunity to change your life, there is also the risk of squandering that opportunity through poor financial decisions or indecision.

At Aviance, we can help you make the most of your inheritance through personalized guidance and solutions that serve your unique needs. Contact us today to set up an introductory call and to learn more about our specialized wealth planning services.

Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a tax strategy and financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. The tax and estate planning information provided is general in nature, which should not be construed as specific financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at

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