Inherited wealth usually arrives from money and property gifted by means of a decedent's last Will.
It could also be obtained through lottery winnings, investment practices, and personal injury or class action lawsuits.
Acquiring inherited wealth is usually a positive event, but can sometimes lead to unexpected dilemmas.
Individuals who are not accustomed to having a lot of money rarely know how to manage it.
Instead of making smart investment decisions that can expand their newfound wealth, recipients often indulge in spending sprees and quickly end up where they started.
People that attain wealth through lawsuits and jackpot lotteries can choose to set up a structured settlement and receive annuity payments for several years.
Structured settlements can be a very good choice for individuals receiving compensation from personal injury lawsuits because they provide consistent income to cover health-related costs and living expenses.
Structured settlements can also be a great option for jackpot lottery winners.
People that are fortunate enough to win mega-millions can elect to have payments spread out over the course of 20 years or receive lump sum cash payment.
Accepting annual payments can reduce tax liability and provide a larger payout.
There are advantages and disadvantages to each strategy, so those who win Super Lotto or Powerball jackpots will want to consult with a tax accountant before choosing the payout method.
When people unexpectedly acquire wealth from a deceased relative it is important to respect their loved ones intentions.
When family members pass along money and gifts they generally do so to improve the beneficiary's lifestyle.
It is not uncommon for heirs to buy expensive luxury items as a way to soothe their grief.
In lieu of squandering inheritance money on materialistic items, heirs will find it more satisfying to learn how to put their newfound wealth to work for them.
The simplest way to learn how to make money grow is to consult with a financial planner or investment company.
Financial experts can offer support and guidance in developing diverse investment portfolios.
Investing in multiple products generally provides a better overall return of investment and can help lower capital gains taxes.
Some other practical ways to use inherited wealth include: paying off outstanding debts; investing in real estate; starting a business; and setting aside funds for retirement.
Another smart practice is to save funds for unexpected emergencies.
Personal finance expert, Suze Orman, recommends setting aside a minimum of 6 months income in high yield savings products such as money market accounts, mutual funds, and U.
S.
Treasury bills and savings bonds.
It is highly beneficial to spend time comparison shopping high yield savings products.
One of the most trusted sources for comparing products is BankRate.
com.
This organization presents detailed guides for interest-bearing checking and savings accounts, CDs, mutual funds, home equity loans, retirement planning, college funding, and taxes.
Individuals that gain unexpected wealth will also want to learn about various strategies that can safeguard money for future generations.
Cash can be protected in trust funds or savings accounts and gifted to children or grandchildren as they reach specific milestones such as college graduation or marriage.
Almost everybody agrees that having sufficient income reduces stress.
Making smart financial choices is vital for getting the most out of inherited wealth.
Instead of throwing money away on luxurious cars and fashionable clothing, spend time learning how to put newfound wealth to work.
Those who learn how to do it right will never have to stress over not having enough money again.