♠ Posted by Marc J. Soss in florida estate planning,florida probate attorney,Florida Retirement,Last Will and Testament,Revocable Trust,Sarasota attorney,Sarasota Tax Attorney,Sarasota Tax Lawyer at Friday, September 04, 2015
The “Great Wealth Transfer”
(the wave of wealth, estimated to be in the trillions, which will flow from the
oldest generation in the coming decades) will land in the hands of many Americans
ill prepared to handle an inheritance. Multiple studies indicate that the
majority of these recipients will quickly dispose of their inheritance. One
study found that one third of people who received an inheritance had negative
savings within two years of the event.
The problem stems from
the fact that those inheriting the funds tend to view it as “fun money” and do
not utilize it to shore up their retirement savings. The 2015 Retirement
Confidence Survey by the Employee Benefit Research Institute found that 57% of
workers have less than $25,000 in savings and investments. In addition, when you factor in inflation, even
a $1 million inheritance will not guarantee a couple’s comfortable retirement.
The following is a
list of expert’s guidance:
A decision-free time
period where no big decisions (large investments or expenditures) are made.
This includes evaluating funds put away for retirement and anticipated cost, the
cost of a child’s education through graduate school, annual trips with the
extended family, or the purchase of a second home for the whole family to use.
The payment of oppressive
debt should also top the list of considerations. Why would you maintain a credit/debit
card with a 20% interest rate when you could not invest the funds and earn a financial
return even close to that amount annually.
The next consideration
should be the creation of an emergency fund in case of unemployment, a medical
emergency, or a big-ticket home repair. The funds can help you weather the
unexpected expense while still maintaining your lifestyle.
Do not make family
members aware of your windfall. If you do, you will quickly learn about
multiple “get rich quick” ideas that distant relatives have for your money or
loans that you will need to pay on someone else’s behalf.
Funds which remain,
after allocating for each of the above items, should then be spent with
caution. What may have initially sounded like a great idea (a second home by
the lake) could result in the purchase of an item that family and friends will
use more than you.
