What Should You Do with an Inheritance ?

If you were to inherit a large sum of money , what would you do with it ? The question may not be hypothetical , especially if you are in the Millennial , Gen X or Gen Z demographic groups . That ’ s because the baby boomers — often referred to as the richest generation in history — are poised to transfer some $ 30 trillion in assets over the next few decades , according to the consulting firm Accenture .

Of course , this is a “ macro ” figure , and everyone ’ s situation is different . Furthermore , since baby boomers are living longer , more active lives , the total amount passed on may end up being considerably less than the estimate . Nonetheless , you may well receive a medium-to-large inheritance someday , and when that day arrives , you ’ ll need to decide how best to use your newfound wealth .

Your first move may be to do nothing at all . Generally speaking , you have enough time to decide how to handle the various elements of an inheritance , although if you are inheriting an investment vehicle such as an IRA or a 401 ( k ) plan , you will eventually have to make some decisions about liquidation or withdrawals . ( And since these accounts may carry tax obligations , it ’ s a good idea to consult with your tax advisor fairly soon after you receive your inheritance .) But if a big part of your inheritance simply consists of cash parked in a bank account , there ’ s nothing wrong with moving the money into a cash management account at a financial services company until you decide what to do with it .

However , after some time has passed , you may want to put your inheritance to good use . If you ’ re already working with a financial advisor , you might want to get some guidance on how to use your new assets to strengthen your existing investment strategy . Do you have any gaps in certain areas ? Can you use the money to help diversify your holdings ? Diversification can ’ t

guarantee profits or protect against all losses , but it can help reduce the impact of volatility on your portfolio .

And , of course , if your inheritance is large enough , it may permit you to “ max out ” on your IRA for years to come , and possibly free you to have even more of your salary deferred into your 401 ( k ) or similar employer-sponsored retirement account . Plus , you could use the money for other long-term goals , such as funding a tax-advantaged 529 college savings plan for your children .

You also might use part of your inheritance to donate to the charitable organizations you support . Due to recent changes in tax laws that caused many people to stop itemizing their deductions , charitable groups are in more need of support than ever .

And last , but certainly not least , take this opportunity to review your goals . Is your inheritance large enough for you to adjust your planned retirement age ? And if that age may indeed change , what about your other plans for retirement ? Will you now be free to travel more or pursue other hobbies ? Will you even need to modify the way you invest for your new reality , possibly by taking a less aggressive approach ? Again , a financial professional can help you answer these questions .

Someone thought enough of you to leave you a valuable inheritance – so use it wisely . This article was written by Edward Jones for use by your local Edward Jones Financial Advisor . Edward Jones , Member SIPC .

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor . Edward Jones , Member SIPC Edward Jones Trust Company and Edward Jones , and their employees and financial advisors , are not estate planners and cannot provide tax or legal advice .

You should consult your estate-planning attorney or qualified tax advisor regarding your situation .

Edward Jones . Member SIPC

Matt Dudkowski has been a financial advisor with Edward Jones since 2002 , serving individual investors in the Pittsburgh area from his Shaler Township office . In January of 2015 , Dudkowski accepted an invitation to become a limited partner with the firm .

Since joining Edward Jones , Dudkowski has obtained the professional designation of AAMS ®. Prior to Edward Jones , Dudkowski , as a CPA , worked at the H . J . Heinz Company , and at Ernst & Young LLP . He currently serves on the board of directors for Keystone Wellness Programs , a local nonprofit organization .

A native of Butler County and a graduate of the University of Notre Dame , Dudkowski resides in Gibsonia with his wife , two sons and daughter .

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What Should You Do with an Inheritance ?