CFP Board Ambassador lists five mistakes to avoid when handling an inheritance
Livonia, Mich., May 20, 2017 – Treated wisely, inheritances can help people meet their long-term goals, from rescuing their retirements to paying off credit card debt to financing family education.
Yet windfalls can turn into mixed blessings when people rush into decisions. Research finds a third of Americans can expect to receive a significant inheritance. But many end up spending or giving too much, when developing a careful plan to spend, save and invest would help them meet their most important financial goals.
“A common theme with an inheritance is a lack of desire to incorporate it into a recipients plans,” said CFP Board Ambassador to Metro-Detroit Robert Schmansky, CFP®. “Many treat it like a gift and they hold onto it like a gift. In reality, it is both a gift and an asset that fit into someone else’s plan, that they wanted you to benefit from and fit into your financial plan.”
In the latest contribution to LetsMakeaPlan.org, the CFP Board offers a list of five mistakes experts often see Americans make when they receive an inheritance.
Spending mindlessly: Some people begin mindless spending on “just a small indulgence.” A series of those kinds of purchases can morph into a spending splurge that might rob people of their ability to reach their overall goals for the inheritance.
Going it alone: Even Americans who manage their 401(k)s or their taxes on their own can benefit from help. That’s because a windfall, whether it’s an inheritance or lottery proceeds, is different. Those who receive an inheritance should consider assembling a team, including an estate attorney, an accountant and a CERTIFIED FINANCIAL PLANNER™ professional.
Making decisions too quickly: Experts say Americans should be careful not to make any big life decisions, like selling a house or quitting a job, too early in the process. An inheritance often coincides with loss, and many people aren’t thinking clearly when their emotions run high.
Becoming paralyzed in the investment process: Sometimes people who receive a lump sum become so worried about “investing at the top,” that they do nothing. They can consider dollar cost averaging (DCA), the investment strategy that divides available money into equal parts and then periodically puts the money to work in a diversified portfolio over time.
Providing for everyone except themselves: People love their kids, friends and charitable organizations – so much so that they sometimes neglect to take care of themselves. Experts advise pushing the pause button. There is plenty of time to provide generous support after a plan is established.
Receiving an inheritance is a great reason to consult a CFP® professional, who can help you tailor a plan that achieves your long-term financial goals.
ABOUT CFP BOARD The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP Board currently authorizes more than 77,000 individuals to use these marks in the U.S.
CONTACT: Jessica Lewis, Communications Specialist P: 202-379-2256 E:jlewis@cfpboard.org Twitter: @cfpboardmedia
ABOUT ROBERT SCHMANSKY, CFP®
Robert Schmansky is the founder of Clear Financial Advisors of Metro-Detroit. Rob has over a decade of experience helping individuals and families meet their financial goals and overcome money concerns. He is frequently quoted in the media on issues regarding personal financial planning, and has been a contributing writer for U.S. News & World Report, Forbes, Investopedia, and Yahoo!Finance, and an investment expert for FiLife, a former Dow Jones/IAC joint Internet venture. He has been an adjunct instructor of economics and the required courses for candidates to sit for the CFP® exam. Investment News selected Rob as a 2015 40 Under 40 financial planning professional and he is the 2013 PlanPlus Global Financial Planning Awards North American finalist.
CONTACT: Robert Schmansky, CFP® P: 248-677-1762 E: rob@clearfinancial.net W: www.clear.financial Twitter: @moneyclarity
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