Receiving an inheritance from your parents, grandparents, other relatives or friends can be a financial windfall. It may come at a time of grief about their passing and you may therefore have complicated feelings about any inheritance – ranging from gratitude to uncertainty about the best way to handle it.

Receiving an Inheritance Is Complicated

The complex issues surrounding inheritances may especially fall upon Generation X, for several reasons. First, our parents – the Baby Boomers — hold a great deal of wealth in assets, including retirement portfolios, investment portfolios, and possibly real estate. Their wealth has appreciated throughout the decades, to aggregate around $72 trillion in total across the nation. As the Boomers age and pass away, the wealth and assets they have accumulated are likely to be transferred to Gen X and their children – an event many dub “The Great Wealth Transfer.”

Second, many Gen Xers feel a great deal of financial strain. We have faced financial difficulties our parents’ generation did not encounter. We do not have the pensions some of our parents and grandparents had. The majority of American companies phased out pensions in the 1980s, replacing them with self-funded retirement plans such as 401(k)s. Many Gen Xers worry that they do not have enough money for retirement as a result.

But fears of running out of money in retirement is only one potential financial burden for Gen X. Many carry much higher levels of debt than previous generations did. Credit card debt levels are high for Gen X. They also may owe very high levels of student loan debt. Debt service can impede savings for other goals, like retirement.

Generation X is also playing a dual – or even triple – caretaker role. Many are taking care of their children, of course, while also taking care of their parents and potentially even their grandparents. Caretaking takes time, money, and planning – leaving less time, money, and planning for Gen X on their own behalf.

The net result of the wealth transfer combined with the financial challenges Gen X faces? Receiving an inheritance may seem highly charged. It can be a time to make sure the financial anxieties you’ve had can be faced and alleviated.

But you also might be unsure about what is the best use of any inheritance. Should you put the inheritance toward retirement savings? Pay down debt? Achieve long-held goals, such as travel or buying a new house? Make sure some of it goes toward care for your parents? Bequeath it to your own children as a way of building generational wealth?

Let’s return to our opening question: should you hire a financial advisor to help you with an inheritance? A financial advisor can help you answer all those questions and provide help in other ways. Let’s discuss why.

How a Gen X Financial Advisor Can Help You With an Inheritance

Financial advisors can help people who have inherited any amount of money. Why? Because a Greeneville, TN financial advisor can play many roles – everything from advising you on investments or other aspects of your financial life to helping you strategize your life goals. 

Let’s put it this way: when folks don’t believe financial advisors can help them with sudden unexpected sums of money, it’s often because they aren’t aware of the range of services financial advisors can provide. 

In addition, most financial advisors offer a complimentary interview, so you can talk to them about what they might be able to provide you and get a sense of whether you are comfortable, all with no obligation.

Let’s look at what a financial advisor can provide in terms of services.

What a Financial Advisor Can Provide

First, financial advisors want to know your individual goals. What do you want to achieve in life, for yourself, your family, your community, and your descendants? Plans are very individualized to these goals; there is no one-size-fits-all. The plan for someone who wants to travel extensively with their inheritance may be very different from one for someone who wants most of their estate to go to charity. Your plans are set up to achieve your goals.

Having said that, once they know your short- and long-term goals, financial advisors have training and expertise in the following areas.

Cash Management

The first step is usually to review your cash management. Your advisor will ascertain your income and expenses. From that, they can tell a good deal about your financial life, including any issues with debt and how much disposable income you have to put toward your goals.

Investment Advice

Financial advisors recommend a number of elements regarding investments, including asset allocations (usually between stocks, bonds, and cash), individual recommendations for asset holdings, and periodic updates of investment portfolio performance. They will also take into account your risk tolerance and factors such as age.

Retirement Planning

Financial advisors can tell you how much you need for a comfortable retirement and how best to get there.

Risk Management

Risk management refers to insurance of your assets, including life insurance if you have financial dependents and insurance for assets such as personal property, homes, and vehicles. Failure to adequately manage risk can sap your income if you have to replace your assets.

Estate Planning

Gen X estate planning covers what happens should you pass away or become incapacitated, including Last Will and Testaments, trusts, and powers of attorney for medical and financial affairs. If you plan to bequeath some of your inheritance, a Will or trust is likely where you would do it.

Tax Advice

Inheritances can give rise to complicated tax issues. A financial advisor can give you advice on tax efficiency (strategies for paying the least tax possible).

Charitable Giving

If you are interested in using your inheritance for charitable giving, an advisor can help you maximize its efficacy and save taxes for you and your estate.

Sapiat Asset Management: Your Financial Advisor in Tennessee

If you’ve received an inheritance or might be receiving one, I can help as a CERTIFIED FINANCIAL PLANNER™ and Registered Investment Advisor (RIA) in Greenville, TN. I offer fee-only financial planning and investment services.  I am a fiduciary, the highest ethical standard in the financial service industry, which ensures you receive unbiased advice tailored just for you.

If you want guidance and advice on any aspect of an inheritance or other aspects of your financial life, we can develop a plan that meets your goals together.