When someone comes into an inheritance, the individual can be conflicted about where to spend the money. Should they spend their inheritance on cars, pay off the house or invest it? It is important for Texas beneficiaries to use and invest the newfound money wisely.
In a recent case, a woman was the beneficiary of $200,000. She was also considering exiting the workforce to take care of her mother who suffers from Alzheimer’s disease. Since she will no longer be earning an income and her family will eventually be living off her husband’s income each year, she was considering prepaying her entire mortgage balance of $90,000 to avoid monthly payments. Both spouses are also driving around in vehicles that are well over 10 years old, so she was contemplating replacing those vehicles with newer ones.
While her mother is living with her and under her care, she will be providing an additional $1,500 per month. However, it might be wise to seek partial assistance from an alternative caregiver, which could help alleviate the burden of not being able to work and continue bringing in some sort of an income. Further, since the woman’s mortgage rate is under 3 percent, it may benefit her more to retain it. Keeping it may also avoid the possibility of a higher interest rate if she elected to remortgage the home in the future. Also, the woman would benefit financially from investing a portion of her proceeds.
An inheritance in Texas is generally valuable to the receiving beneficiary. Such an inheritance could include almost any asset, including money, property and trust funds. If an inheritance is money, then it’s wise to use it in a manner that will offer long-term benefits, such as investments. Learning about the best way to handle an inheritance could protect one’s financial future.
Source: Fox Business, Picking Priorities with an Inheritance, Dr. Don Taylor, Nov. 18, 2013