Managing Inheritance

Sep 13 2021 | 2 min

As we come of age, we face the inevitable loss of our elders who nurtured and protected us and must continue life without them. If we’re fortunate enough, we may inherit some of their hard-earned wealth.

Coming into a large inheritance can be life changing. It may mean the ability to repay loans, buy a home, start a business, or set aside a nest-egg for retirement. Unfortunately, inherited wealth is too often short-lived due to irrational spending and the lack of financial planning. Before beginning to spend, inheritors should assess their financial situation, reflect upon their goals, consider their options and draw an investment plan.

Evaluate Your Finances and Consider Your Goals

When people inherit substantial estates, they get a sense of financial security and are tempted to overspend, depleting their inheritance over time. The best advice is not to touch your inheritance until you have assessed your financial situation thoroughly.

The assessment of your financial situation starts with understanding your income, expenses, assets and liabilities. With that in mind, think about your life goals and reflect upon your short-, medium-, and long-term objectives. This may include academic and professional qualifications that advance your career, business ventures, retirement, and planning for your family and future generations. If this proves to be overwhelming, seek help from a professional financial advisor.

Pay Your Debt

Before you spend your inheritance, reduce your debt, starting with the most expensive debt (like credit card balances). This reduces your expenses and frees up your future cash flow to repay less expensive debt and start planning to invest your savings.

Develop a Plan

You need a solid plan that preserves and grows your wealth to meet your financial goals and perhaps pass it to future generations. Again, if this proves to be overwhelming, seek professional help from a financial advisor. The financial advisor should assess your financial state, goals and risk appetite, and develop a financial plan to invest your money.

Invest

Your inheritance will not last long without an investment plan. The plan should entail building an investment portfolio that is diversified across liquid and illiquid asset classes (stocks, bonds, real estate, equities, alternative investments, etc.), in multiple geographies and within each asset class. The key is to ensure that the assets in your portfolio are uncorrelated to avoid vulnerability to risks that affect specific geographies or asset classes.

The Family Office

The Family Office can help you protect and grow your wealth by picking the right investments to achieve your financial goals. Our diversified portfolio solutions use our global network to source exclusive investment opportunities in private equity, private debt, real estate and more, that are usually available only to large institutional investors, designed for your unique needs, preferences, and lifestyle.

Talk to our financial experts to safeguard your inheritance.

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