Have you ever heard of someone inheriting loads of money and blowing it shortly after. Yes, we’ve all heard the stories of lavish purchases and Ponzi schemes, but there are many other simple ways that people lose the money they inherit. Here’s a couple of things you should NEVER do if you ever get an inheritance.
1) Never delay taking care of your taxes
When you receive an inheritance in can be a substantial amount of money. But before you spend it all, it’s important to understand that you’re responsible with the taxes that come with it. Advise an accountant to see what taxes you owe on the inheritance. Once this is taken care of you can start to spend.
2) Never pay off your mortgage
You’ve now got amble money in the bank. You should definitely take care of your mortgage and pay off the house, right? Wrong. While this may seem like a smart thing to do, it’s not the smartest move financially. By having a mortgage you receive tax advantages. When this is paid off you lose those tax advantages. While paying off your mortgage is a bad idea, paying off your debt, like credit card payments, is a great idea.
3) Never try to quickly make more
Now that you’ve inherited a substantial amount of cash, you’ve suddenly become the target of people looking to lure you into a risky investment. While it may promise big returns, there is likely large risk behind it. It’s much safer and smarter to invest in something safe and steady.
4. Never pretend your an investing expert
Now all of a sudden you have enough money to invest in different endeavors. However, just because you now have the cash, doesn’t mean you’re an investing expert. It takes time and education to get a good understanding on different investments. We recommend you only invest in things you understand.
5. Never wait to set a beneficiary.
This rarely comes to people’s mind when they inherit money, but you don’t have a beneficiary set up for this new cash. Make sure to do so ASAP. If an accident happens, the financial situation can turn into a mess without the plan you dictate by choosing a beneficiary.
6. Never get sucked into getting a timeshare
One of the worst investments we see is buying a timeshare. While it might seem nice now, it’s an awful decision and locks you into continuous payments. Besides, most people stop using the timeshare later on in life. Do yourself a favor and spend your money on a vacation instead.
7) Never go crazy with your spending from your inheritance
One of our main instincts after inheriting a large sum is to make a large purchase. Imagine how much more the money would do for you though if you invested it early. Additionally, while buying a shiny sports car may seem sexy, it’s a depreciating asset that will cost you upkeep as time goes on.
8) Never openly share how much money you inherited
There’s absolutely no need to talk about or brag about your inheritance. When people find out about your financial situation they may treat you different or try to take advantage of you. Your inheritance is your business, so no need to tell the neighbors. We also suggest staying away from buying flashy items. It’s much easier to keep a low profile without items that stick out.