Bizzie, a thoughtful and practical woman who has carefully cultivated her legal consulting practice for decades, is married to a high school music teacher and has one son–a teenager soon to complete his senior year and head off to college. Our story begins when Bizzie inherits a substantial amount of money following the sudden death of her father. While the handling of the family finances was always her husband’s responsibility, upon receiving this inheritance–which felt like a windfall to Bizzie–she realized she wanted to take charge of this money and for the first time in her life become financially literate. Bizzie wanted to be confident of doing the right thing; after all, this inheritance was high stakes money for her.
Bizzie quickly determined that step one on the road to financial literacy was to hire the right financial advisor. A linchpin for her, as she researched with whom to work, was learning about Entrust Financial’s commitment to planning and having a team of advisors who are Certified Financial Planner™ Professionals. When she contacted us to schedule a consultation, one of the first things she said was, “I want to do the right thing with my inheritance. I hope that with proper planning my father’s gift will make it possible for my family to achieve our most important financial goals.”
During our initial consultation Bizzie was articulate in sharing her goals, which included:
Prepare for a secure retirement
Provide a college education for our son
Earmark a $2 million-dollar legacy for our son
As we worked with Bizzie to formulate and implement a wealth plan for achieving her stated goals, we recommended an assignment: develop a precise understanding of expenses by tracking all family expenses over a period of several months using this budget spreadsheet. She was thrilled when this homework assignment allowed her to answer the question, “What does my family need to spend to be comfortable?”
Although she completed the expenses-tracking assignment in preparation for the successful implementation of her wealth plan, two excellent and unexpected outcomes resulted from her efforts:
She discovered her husband did not prefer to be solely in charge of the family finances. In fact, he indicated that going forward he was thrilled to share this responsibility with Bizzie, who enjoys the details far more than he.
She discovered that her inheritance portfolio could provide income today, thereby allowing her to take a step back from her consulting practice and finally pursue her dream of attaining her doctoral degree.
As Bizzie and her family experienced, “doing the right thing with your inheritance” can have far-reaching effects, superb outcomes that go beyond financial confidence and a sense of security knowing the achievement of important goals is within reach. Contact us today to explore how to accomplish your most important financial goals.
When we realize that we have inherited money, most of us have the thought, “Wow, I want to make sure that I am responsible with this money but I have no idea what to do!”
A good first step is to determine the answer to the following question: “What do I want this money to do for me?” There is no right or wrong answer to this question and the answer will be slightly different for everyone. For example, our client Mary contacted us upon inheriting money from her father. She wanted to be sure that she was being responsible with this money and for the first time in her life to feel financially literate.
After some careful thought and discussion, it was clear that Mary wanted her inheritance to help her accomplish 3 primary goals:
Provide her family with some income now. Mary wanted to take a step back from her current career and pursue her dream of entering a different field.
Grow her money for retirement. It was very important to Mary that she and her husband would have financial security throughout their lifetimes.
Pass money along to her daughter. Ideally Mary wanted to be able to keep the principal intact so that she could leave a legacy.
As you can see, Mary had important goals that she wanted to address with her inheritance. She was not sure how or if she could obtain these goals, which leads us to the next important point.
After you have determined your priorities, the second step is to decide how your money should be invested. Keep in mind that investments are really just tools to help you accomplish everything that is important to you; this is why you need to start by determining your goals.
Many times people who inherit from a family member (especially a parent) think their money should be invested the same way that their parent chose to invest. This may not be a good idea primarily because your investment portfolio should be designed to fit you. Your financial picture is likely different from the person from whom you inherited the money.
For instance, when Mary first walked into our office she thought that all of her money should be invested in municipal bonds and Exxon stock because that was how her father had invested his money. After some education, Mary came to the realization that because her financial life and priorities were different from her father’s, her investment portfolio should also be different.
As you can see, inheriting money is complicated. If you find yourself having a difficult time making decisions you may be inadvertently trying to please or adhere to the philosophy of someone else. My suggestion is to give yourself permission to let go of the past and confidently seek the advice you need. If you are ready to seek the advice you need, contact us today.