It's a difficult time in your life right now, and thinking about what to do with an inheritance may be the last thing on your mind. However, at some point it's important to consider your options regarding the legacy left to you by a loved one.
The death of a loved one can be a trying time. It's difficult enough to deal with the emotional strain of such a loss. Making funeral arrangements, coping with grief, and finalizing the deceased's estate all can take time and energy when you have little to spare.
Sometimes, you need to make crucial financial and legal decisions relating to your own life as well. But it's important not to make any hasty financial or legal decisions while grieving. Whenever possible, give yourself all the time you need to think things through.
When Someone Cares Enough
One decision you may eventually need to consider is what to do with the inheritance you expect to receive. This can be painful to even think about, but it's important. After all, the inheritance is the legacy of a loved one who cared enough to make provisions for you in the event that he or she could no longer be with you. It's important that you make choices that are in your best interest, both now and down the road.
Some beneficiaries may choose to use part of an inheritance to treat themselves to something they otherwise may not have been able to afford or to pay off debts that may have been burdening them. For some, this helps them as they go through the grieving process. In fact, it's possible that your loved one might have wanted you to do something nice like this for yourself.
Of course, your loved one probably would have also wanted you to have some measure of security for the future. That's why when you're ready to think about how to manage the bulk of your inheritance, it's a good idea to sit down with an advisor who can review your options with you.
Protection for Your Loved Ones
You may decide that one thing you'd like to do is provide financial protection for your loved ones in the same spirit that it was provided for you. The loss of your loved one may mean that others are even more dependent on you, and that's when the importance of life insurance becomes evident. Since life insurance proceeds may not be subject to probate, they can provide a lasting legacy and offer immediate protection against financial loss in the event of your death. Permanent life insurance can also offer many living benefits such as tax-deferred cash value accumulation, the ability to borrow1 from cash value on a tax-free basis, and eligibility to earn dividends2 as declared by the insurance company. If you don't yet own life insurance on yourself, you may want to consider it for all of these reasons.
1 Loans reduce the death benefits.
2 Dividends are not guaranteed.
And For Yourself
When you're ready to manage the bulk of your inheritance, remember that there are many vehicles that can be used to meet both short- and long-term financial needs. You may need products that allow for frequent access to your money to handle day-to-day expenses, as well as vehicles that are aimed towards money that you can set aside for the future. One of the best overall money management strategies, many experts agree, usually combines some risk (and the potential for higher return) with a measure of safety.
Think About Annuities
Many people choose to place inheritance money in annuities to grow long-term funds for the future. There are some solid reasons for this choice. Annuities are flexible, tax-deferred vehicles that can be used to help achieve long-term financial goals and provide a source of retirement income. Additionally, the money in an annuity accumulates tax-deferred, which means you only pay taxes on your earnings when the money is withdrawn. (However, any withdrawals made prior to age 59 1/2 may be subject to a 10% IRS penalty tax.)
Annuities also offer flexibility. With some annuities, you can "lock in" a guaranteed interest rate for a specific period of time. With others you can choose from a variety of funding options offering different levels of risk and growth opportunity, and you can change your funding choices regularly. Ultimately, annuities can help offer you protection against outliving your savings. Lifetime income annuities are guaranteed to keep paying you for as long as you live. Lastly, an annuity can provide the security of a guaranteed death benefit for the protection of your loved ones.
When the Time is Right
There are several different types of annuities from which to choose. Which one may be right for you? There is no general answer, as it all depends upon your individual needs and objectives. But when you're ready to manage the last gift from a loved one — your inheritance — it's a good idea to speak to a professional who can clearly explain the options available to you.
It's also important to have a reputable company backing your efforts. New York Life has been in the business of helping people achieve financial security for over 150 years. A New York Life agent — professionally trained and experienced — can help you analyze your needs and recommend appropriate solution through insurance and financial products and concepts — at no charge to you.
Annuities issued by New York Life Insurance and Annuity Corporation.
New York Life Insurance Company
New York Life Insurance and Annuity Corporation (A Delaware Corporation)
51 Madison Avenue
New York, NY 10010
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