Prepare for Changes an Inheritance Brings
Horrigan, Denis, Medical Economics
When you hear the word "inheritance," what images come to mind? For some it may be the child of a billionaire flaunting expensive sports cars and luxurious homes. Others may think of sitting in an attorney's office with family members reading a will.
Whatever you think of, the reality is that receiving an inheritance brings many challenges that you will need to prepare for, especially as a physician. Here are some of the biggest challenges, along with suggestions for meeting them.
Take time to process your emotions. An inheritance often is accompanied by feelings of loss. Whether it is a family member or close friend who has died, you must process the emotions. Your decision-making skills are not at their peak during this time. By waiting 6 to 9 months before making any big decisions or commitments, you are giving yourself time to heal and reflect on what is important to you.
Be patient. Settling an estate usually is a time-consuming and frustrating process. Often it can take a year or more. If you are the executor of the estate, fulfilling your duties may take you away from your practice. Having patience will help see you through the process.
Review your plans. Before the inheritance, you probably had plans. Consider them as you decide what you are going to do with your inheritance. Think about retirement and your childrens' college educations before using your newfound funds to purchase a second home or make a major gift to charity.
Ask your financial adviser to run cash flow projections to see where your money will be the most productive. For example, if you own a practice, can you use your inheritance to fund your current lifestyle? If so, can some income from your practice be deferred into tax-sheltered vehicles to lower your taxable income? Planning now will help you live the way you want now and in the future.
Mitigate the risks. As a physician, you are aware of the litigiousness of today's society. Unfortunately, your inheritance may make you an even bigger target for lawsuits if it is substantial. …