Double the inheritance, double the planning

FAMILY AND LIFESTYLE

Women may be in for double the planning when it comes to managing windfalls.

Inheritances are a blessing that can relieve old debts while opening doors you didn’t know existed. However, as fortuitous as an influx of wealth can be, the emotional and administrative complexities that often come along with sudden wealth can be overwhelming.

Did you know that roughly 80% of women outlive their husbands, according to the U.S. Census Bureau? Considering women are also expected to inherit $28.7 trillion in intergenerational wealth over the next 40 years, it seems likely that many married women may receive not one, but two inheritances in their lifetime – from their parents as well as their husbands.

So what exactly does this mean for your life and future?

Sudden wealth, especially as a result of a loss, can add a host of complicated feelings to an already difficult time. Fortunately, you don’t have to navigate the complexities alone. Whatever events your life may have in store, your advisor can help you factor in practicalities and prepare for what lies ahead.

Plan now, breathe easier later

Many women are already playing a proactive role in their household’s finances. Research from RBC Wealth Management found that 98% of women are joint or sole family banking decision-makers, while 84% take joint or full responsibility for family investments. Still, receiving an inheritance from a spouse could mean that for the first time some women have to make financial decisions all on their own.

A survey found that only 14% of widows were making solo decisions about their wealth before their spouse died.

Fortunately, you and your spouse can plan proactively and mitigate some of the stress either of you could experience in such an event by putting together a survivor’s plan. Work with your financial advisor to discuss what should happen in the event that either of you becomes the sole bearer of your household’s wealth. Be sure there are no gaps in your long-term wealth strategy that could create complications, such as a shortage of liquidity. As always, don’t forget to periodically make sure the details in your estate planning documents are up to date, particularly your beneficiaries.

No sudden movements

If and when you do receive an inheritance, there are several factors to keep in mind as you go about incorporating it into your life and financial plan. For starters, don’t rush to make any decisions. A significant wealth event not only comes with strong emotions but can trigger requests for loans from friends or family or a deluge of unsolicited advice from the well-intentioned. You may even find yourself with an intense urge to give or spend it all at once. Not so fast.

Rather than immediately going down any of those avenues, set a holding period for yourself – perhaps six or 12 months – before you decide what next move feels best for you. Take this time to think about what’s most important to you and how your new assets might support those goals, whether they involve your career, your family or your community. If you don’t have one already, get a team of professionals in place, including an estate attorney and CPA, as they can work in accord with you and your financial advisor to help ensure all your wealth and life management details are accounted for.

Many women view money as a way to care for themselves and their families. You might see an inheritance as an opportunity to set aside funds for a child’s or grandchild’s education or as a means to help ensure your family’s financial confidence. As you think about your goals for your wealth, don’t forget to take your own longevity into account. Not only do women generally live longer than men, but people are leading longer lives in general, making it an important consideration as you update your financial plan.

Beyond planning for your longevity, your professional advisors can help you manage the other nuances of significant wealth, as well. For example, while some liquidity can be useful, too much idle cash can be vulnerable to depreciation instead of being thoughtfully invested. Further, your advisor and CPA can work together to implement tax-efficient strategies to help preserve your wealth for you and your family.

Whatever life or wealth events might come up, don’t forget that in this situation and countless others, your advisor can serve as a knowledgeable sounding board as you explore your options and prioritize goals.

Sources: FINRA, Merrill Lynch, Age Wave, Forbes, RBC Wealth Management, CNBC, Fidelity

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Raymond James is not affiliated with RBC Wealth Management.