NMFN: LC, LE, WI, Managing an Inheritance

After the estate is settled and you know what your inheritance will be, the responsibility sets in. How are you going to manage this money to get the most benefit from it? Many baby boomers are going to be faced with this question in the near future. Some experts have estimated that boomers will inherit approximately $40 trillion from previous generations.

If you receive even .00001% of that $40 trillion, you'll have $400,000 to allocate toward your financial goals. Examining your financial goals and obligations should quickly diminish the temptation to spend your inheritance on immediate gratification. Buying a new car or taking a lavish vacation may seem like a real treat, but rarely do you get the opportunity to take a large sum of money and channel it toward improving your long-term financial health.

Contemplate Your Options

What are your financial goals? Do you have college educations to pay for, retirement savings that need a boost, or a trust fund that could reach more beneficiaries with additional capital?

Take some time to evaluate your immediate or approaching needs and your long-term goals. Balance the opportunity cost associated with each need and goal. Think about where the money could go the farthest and where it would have the best impact. Another great way to evaluate this opportunity is to think about where you would be in 15 years if you chose to allocate money to one goal versus another.

Define Your Strategy

Maybe receiving this inheritance has caused you to reevaluate your financial goals, investment style and risk tolerance. All three areas are integral to defining your financial strategy. Knowing yourself and how you want this money to work for you will go a long way toward helping you allocate it appropriately.

There may also be tax issues associated with your inheritance. Know what type of funds you have received and how they are packaged or sheltered. This information will influence how you are able to access, allocate, and invest your inheritance.

Making Decisions

You may decide to use this opportunity to pay off some debt, establish a contingency fund, or invest for a future need. Receiving an unexpected sum of money is a great time to evaluate your financial needs and goals.

Take time to make an informed and careful decision. Don't rush yourself. If you are feeling at all uncomfortable with the road you're heading down, wait to make your move. Consult a Northwestern Mutual Financial Network Representative. Speak honestly with them about your concerns, goals, and hopes for what this money will accomplish for your family.

Your Financial Representative has access to a wealth of resources that will make your decision-making process much easier. This inheritance may be the best financial opportunity you ever receive. Make sure you leverage all the resources available to you.