Cover Story
Inheritance windfall? So many things you could do
By Co Leber
ROCKFORD WOMAN
Apr 25, 2008 @ 12:01 AM
If an inheritance lands in your lap, take a deep breath.
Think.
And seek sound professional financial advice ASAP.
How someone who inherits, say, $100,000 or more deals with that money depends on that person’s lifestyle, goals, concerns and passions, says Karen Vodden, 50, a financial adviser with Smith Barney.
To keep from frittering away the money, the recipient of such a windfall should consider the variables that define her life.
And those variables definitely are personal.
Pamela Kitsemble, 38, a Belvidere mother of three, says that if she received $100,000, “I would pay off small bills and put a little away in savings.”
More than $100,000? “I would totally enjoy giving to help other people,” Kitsemble says. “It is such a good feeling to pay off somebody’s bill that we know.”
Kelli Jackson, 41, single, of Rockford says, “If it were $100,000, I would invest in IRAs, mutuals and maybe buy some property like a duplex.”
More dollars would allow her to invest in a small business.
“With these things in mind, a financial plan should be implemented that addresses the individual’s income and cash-flow needs, borrowing, asset protection, philanthropy and other areas beyond investment management,” Vodden says.
If the amount is large enough to share in a charitable way, share a financial windfall only after fully assessing your needs.
She notes that as often as an individual’s life circumstances change, she should:
* Re-evaluate her assets.
* Determine what the assets mean to her.
* Determine what the assets would be used for.
* Determine who else could benefit from the assets.
“Lastly,” she says, “be sure to find someone you can trust who can help you map out your personal plan.”
Finding that adviser can be as simple as asking a family member or good friend. Just remember that you want a good fit, a person you can feel comfortable with.
Don’t forget that adage that if investment plans seem too good to be true, they probably are.
After all, investing your windfall wisely could benefit future generations.
Don't count on it
Baby boomers are on the verge of retirement and have parents known for smart saving. So how much should they expect to inherit?
In the 1990s and early in the new millennium, experts offered grand visions of baby boomers landing on hundreds of thousands of dollars through the transfer of wealth.
But more recently, those dollar-sign dreams have been shattered by the reality of today’s economy, people living longer and the fact that baby boomers frequently must be caretakers for their parents. A 2006 study by the AARP, for instance, finds that about “one-fifth of boomer households have received inheritances. And only 15 percent still expect to receive one. Further, of the boomer families who have received an inheritance, the median value was about $64,000. While this is a nice chunk of change, it’s not likely to solve all of your financial and retirement needs.”
The upshot? According to AARP, saving for retirement still is key. For more information and tips, visit aarp.org.
