28th October 2019
Double the inheritance, double the planning
Inheritances are a blessing that can relieve old debts while opening doors you didn’t know existed. However, as fortuitous as an influx of wealth can be, the emotional and administrative complexities that often come along with sudden wealth can be overwhelming.
Did you know that according to data from the ONS (Office of National Statistics) women on average outlive their husbands? Considering women are also expected to inherit a sizable amount through intergenerational wealth over the next 40 years, it seems likely that many married women may receive not one, but two inheritances in their lifetime – from their parents as well as their partner. So what exactly does this mean for your life and future?
Plan now and breathe easier later
According to research cited in The Telegraph, more women in the UK are taking on full responsibility for their household finances. Despite this, receiving an inheritance from a partner could mean that some women have to make financial decisions on their own for the first time.
Fortunately, you and your partner can plan proactively and mitigate some of the stress either of you could experience in such an event by putting together a plan. Work with your financial planner to discuss what should happen in the event that either of you becomes the sole owner of your household’s wealth. Be sure there are no gaps in your long-term wealth strategy that could create complications, such as a shortage of liquidity. As always, don’t forget to periodically make sure the details in your estate planning documents are up to date, particularly your beneficiaries.
No sudden movements
If and when you do receive an inheritance, there are several factors to keep in mind as you go about incorporating it into your life and financial plan. For starters, don’t rush to make any decisions. A significant wealth event not only comes with strong emotions but can trigger requests for loans from friends or family or a deluge of unsolicited advice from the well-intentioned. You may even find yourself with an intense urge to give or spend it all at once.
Rather than immediately doing something, set a holding period for yourself – perhaps six or 12 months before you decide what your next move should be. Take this time to think about what’s most important to you and how your new assets might support those goals, whether they involve your career, your family or your community. If you don’t have one already, get a team of professionals in place such as a lawyer and they can then work in accordance with you and your financial planner to help ensure all your wealth and life management details are accounted for.
Many women view money as a way to care for themselves and their families. You might see an inheritance as an opportunity to set aside funds for a child’s or grandchild’s education or as a means to help ensure your family’s financial confidence. As you think about your goals for your wealth, don’t forget to take your own longevity into account. Not only do women generally live longer than men, but people are leading longer lives in general, making it an important consideration as you update your financial plan.
Beyond planning for your longevity, your financial planner along with other professional advisors can help you manage the other nuances of significant wealth as well. For example, while some liquidity can be useful, too much idle cash can be vulnerable to depreciation instead of being thoughtfully invested. Your financial planner can work together with you to implement tax-efficient strategies to help preserve your wealth for you and your family.
Whatever life or wealth events might come up, don’t forget that in this situation and countless others, your financial planner can serve as a knowledgeable sounding board as you explore your options and prioritise goals.
Source: Office of National Statistics, the Telegraph, FINRA, Merrill Lynch, Age Wave, Forbes, RBC Wealth Management, CNBC and Fidelity.