Planning For Future Inheritance
REM #F720
By Ilyce R. Glink
Summary: A reader is planning for his retirement and realizes that both he and his wife will inherit money from their parents. Ilyce explains to him inheritance tax law and helps him plan for using the money or land.
Q: I believe we have planned fairly well for retirement. We might even be able
to retire a couple of years before we turn 65 years old.
But I'm trying to anticipate how to plan for an eventual inheritance. I have
not counted on that cash for retirement income but I also don't want to be blindsided
since some of our inheritance will be as real estate. Our guess is that eventually
this might be an additional $500,000 coming from my family and my wife's family.
Both families have wills. My wife and I are named as executors in both her parents'
and my parents' wills. What inheritance taxes should we anticipate? How should
a lump sum inheritance be invested to provide long term benefit during retirement
years? All of our families live in Georgia.
A: First, don't worry about inheritance taxes. Whatever cash or real estate
you receive, the taxes (if any are due) will have already been paid. If you
get $500,000 worth of real estate, it'll be free and clear.
In terms of providing long-term benefit, that depends on how old you are and
when you get the cash. You can keep the real estate you'll inherit or sell it
and buy other investment property. That'll generate cash flow to supplement
your retirement benefits.
Or, you can take the cash and invest it in stocks and mutual funds. Or, you
might end up using it to help your children buy their own homes and start their
lives.
You're wise to start planning now for this inheritance, should you be lucky
enough to get it. I'd sit down with a fee-only financial planner (one you can
hire by the hour preferably) to go over all of your finances and see what, if
any, holes you can plug with these funds.
Thanks for visiting ThinkGlink.com
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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