Tips for Managing Sudden Wealth after Death
Death of a loved one is always difficult. Sudden death is devastating and upending. Many of us have either unfortunately experienced it or know someone who has been through it.
The overwhelming emotional toll of loss is often magnified by the logistical wake of decisions and paperwork. Grieving spouses, parents, or adult children can be left financial puzzles including the sudden inheritance of wealth.
Like all investing situations, decisions regarding unplanned-for inheritances are best made while uncompromised by emotion. This is especially difficult when the source of the wealth is from someone you loved. Yet, placing and making financial decisions based on your emotions can lead to costly and long-term errors.
Allow yourself to grieve first.
Allow yourself to be sad and get through the first stage of grief. This truly takes different lengths of time for different people. In this stage, people should avoid making hasty decisions – about anything! It’s important not to ‘overshare’ about your financial situation or be pushed into making a major decision. And do not make impulsive gifts just because someone asks!
Then, take inventory.
Step two is to assess what you have. At this stage, it’s time to begin to show your resilience. Were you left with an assortment of accounts at different banks and financial institutions? For many, this is their definition of “diversification.” I’m here to tell you that it is not; diversification of assets can be achieved with minimal bank accounts. Overly complicated financial arrangements often create much more work for those left behind. Gather your statements and realize that the way forward is to ask for help and to consider consolidating what you can to diversify better.
Find and enlist a CFP™.
If you don’t already work with a CERTIFIED FINANCIAL PLANNER™ it would be time to start that search. And please don’t expect that achieving a level of financial success means you or someone else is well positioned to determine your best next steps. Believing you can handle all things on your own will only compound your grief and anxiety. The best way to honor the gift that has been bestowed upon you is to work with a professional that you can trust and collaborate with. You should look for a professional trained in financial matters who is a good listener and speaks in terms that you understand. If you do not already have a CFP, ask for referrals from other trusted advisers or from your network.
Many that relied on their now-deceased spouse to handle the “financial stuff” feel overwhelmed and unable to move. Often times they lack the financial confidence to make decisions and feel stuck. Excuses such as “They set it up that way so it must be the way they wanted it” are common. The truth could be that perhaps the now-deceased spouse may have been procrastinating or ignoring advice. It’s time to get a professional opinion and invest with your goals and values in mind. The best and most successful plans involve designing a plan appropriate to your new lifestyle, risk tolerance and values.
I met with a middle-aged widow a few years ago that let her husband do the “investing” while her role was to manage the household budget. In fact, this is a common division of duties. Unfortunately, the husband passed without divulging much in the way of what and why he invested the way he did. She didn’t know what she owned or if she was at risk of running out of money. Still, she resisted for a year or more to sit down with a professional planner to ask some very important questions – mainly, what exactly she owns and when would she run out of money? She had a whole lot of questions for me by the time we sat down to develop her plan.
Working with a dedicated financial professional team including a CFP® means you will receive guidance on your unique situation. From setting up an income replacement plan to investment management and taxes, find someone willing to educate you and develop a holistic plan based on you, your family dynamics and new reality.
Nothing can replace peace of mind when you are facing the new financial reality that comes with sudden wealth and we are ready to help. To schedule a confidential conversation, you can reach me at 414-858-6777 or firstname.lastname@example.org.
The information herein is published and provided for informational purposes only. The information in the post above constitutes the opinion of the authors. None of the information contained herein constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The author is not advising on the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
The Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.