5 tips to make the most of your inheritance

Getting an inheritance can be complicated. The money often comes with the death of a loved one, which can make knowing what to do with inherited money an emotional undertaking as well as a financial one. Taking some simple steps to make the most of your inheritance can make the process easier. Here are five tips to help ensure you use your inherited money wisely.

1

Get your financial house in order

Tackle the basics first. Pay down any high-interest debt (generally credit card debt) and start building an emergency fund of at least six months of living expenses.

2

Make your money work for you

If you’ve already started contributing to an emergency savings fund, consider setting up or adding money to an IRA for your retirement or a 529 college savings plan. A Merrill Edge Financial Solutions Advisor™ can help you decide what’s best for you.

3

Minimize your mortgage

Americans spent more than 26 percent of their income on housing in 2015,1 so using your inheritance to help shrink your mortgage payment could be a good decision. Consider refinancing your home loan for a better rate or shorter term, which could save you money in the long run. You can use a portion of your inheritance for closing fees.

4

Set aside funds for short-term financial goals

If you’ve made smart decisions with your inheritance, you can feel good about using a portion of your money on short-term goals, such as a family vacation or a new car. However, you may want to limit the amount you spend on short-term, wish-list items.

5

Resist the urge to use all the funds

Think long term: Your inheritance could be an opportunity to start building wealth and to create long-term stability for you and your family. It could also be a big help in getting you closer to reaching long-term goals.

It may be useful to talk to an expert about how to handle your inheritance. A Bank of America banking specialist may be able to help. 

  1. Bureau of Labor Statistics
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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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