Inherited Money or Property? How a New Inheritance Can Change Your Estate Plan

An inheritance can arrive at a complicated time.

You may be grieving someone you love while also trying to understand what happens to the money, property, or other assets they left behind. Then, somewhere along the way, you may realize something else: Your own estate plan has changed, too.

Receiving a significant inheritance can change what you own, how your assets are structured, and what you want to leave behind someday. That doesn't mean you need to start over, but your plan may need a fresh look.

Your Estate Plan Should Reflect What You Own Now

Estate planning works best when it reflects your actual life, not the life you had when your documents were signed.

Maybe you inherited a retirement account. Maybe there's cash sitting in an account you didn't have before. Or perhaps you suddenly own a home, investment property, or an interest in a family business. Those changes can affect your estate plan.

It's important to look at more than the documents themselves. How an asset is owned can affect what happens to it later. Beneficiary designations can matter, too.

For example, if your estate plan was created when you owned one home and a modest amount of savings, but you've now inherited another property and a substantial investment account, the instructions you created years ago may no longer accomplish what you want.

It's why an inheritance is a good reason to review the whole picture.

An Inherited Home Comes With Its Own Decisions

Real estate can be one of the most meaningful and complicated things to inherit.

Imagine your parents leaving you the family home. At first, you may think, “I'll never sell it.” Then real life begins. Maybe the house needs significant repairs, you live several hours away, another family member has an interest in the property, or you decide you'd rather rent it than sell it.

Before making a major decision, it's worth understanding how the property is titled and what your options are. An inherited home also changes the value and composition of your estate; if you eventually decide to keep the property, your estate plan should account for it.

The important question isn't simply, “What did I inherit?” It's, “What does owning this asset mean for my plan going forward?”

Beneficiary Designations Can Become More Important After an Inheritance

Some assets don't pass according to your will or trust. Retirement accounts and life insurance policies, for example, generally have their own beneficiary designations – that matters after an inheritance because your financial picture may look very different than it did before.

Take a moment to review:

• Who's listed as your primary beneficiary?
• Who's your contingent beneficiary?
• Do those choices still reflect your wishes?
• Do the designations coordinate with your trust and other estate planning documents?

A beneficiary designation that's years out of date can create a very different result from what you intended. Simply, your documents and your asset ownership should work together.

Don't Forget About the Next Generation

There's another shift that happens when you receive an inheritance.

You may have gone from being someone else's beneficiary to becoming the person responsible for deciding what happens to those assets next, changing the conversation with your own children, grandchildren, or other loved ones.

Maybe you want the inherited property to stay in the family. Maybe you want to provide for your children differently. Maybe you want to protect certain assets or create more specific instructions for how they're eventually passed on.

These decisions don't have to be made all at once. Start by asking what you want the inheritance to accomplish. Then look at whether your current estate plan supports that goal. This is especially important if your family circumstances have changed since your original plan was created.

Your Inheritance Deserves a Plan

An inheritance can be a gift, but it can also bring decisions you weren't expecting to make.

Taking time to review your estate plan after receiving significant assets can help you understand what you own, how those assets fit together, and what you want to happen to them in the future. Estate planning isn't something you do once and put away forever because your life and assets change. Your plan should change with them.

If you've recently inherited money or property, Heather Pietroforte can help you look at the bigger picture and determine whether your current estate plan still fits your life. A thoughtful review today can help make sure the inheritance you received is handled intentionally and becomes part of a plan that works for the people and priorities that matter to you. Get in touch!