Inheritance? Live it up a little bit

Staying Ahead

November 10, 1997|By Jane Bryant Quinn | Jane Bryant Quinn,Washington Post Writers Group

OVER THE decades ahead, trillions of dollars will pass from members of the nation's all-time wealthiest parental generation to their baby boomer children.

Whether your inheritance is modest, moderate or major, you'll find good advice in a book called "Managing Your Inheritance" by two Los Angeles attorneys, Emily Card and Adam Miller (Times Books; $15 in paperback).

Younger heirs will find a lot of sensible talk about setting priorities.

For example, say you receive a modest sum -- under $50,000. If your kids are in college, that's where the money will probably go.

But if not, and you've been pinching pennies all your life, you may feel suddenly rich. Some heirs squander the money on expensive trips, new cars, new furniture.

I'm all for blowing $5,000 on a fabulous trip. You should take some joy from the gift that your parents labored to leave.

But don't blow it all. If you invest $45,000 at a conservative 6 percent after tax, you'll have $80,500 10 years from now and $144,300 in 20 years -- not even counting dividends. That will pay for a lot more trips, and a far more comfortable retirement.

What about heirs with a moderate inheritance -- say, $50,000 to $250,000? Education or retirement still should be top priorities (again, after blowing $5,000 to $15,000).

You might also be able to repay credit card debt, and older heirs might want to pay off the mortgage.

What about drawing an income from the money, to improve your standard of living? Younger heirs would generally be smarter to reinvest for higher returns.

Older heirs might be glad for the extra income their inheritance can provide.

A major inheritance -- say, $250,000 and up -- calls for expert help if you haven't invested that much money before.

A certified public accountant can advise you on taxes and budgeting. Also ask how much you can prudently take from your windfall every year. A capable financial planner also should be able to help.

Stockbrokers, financial planners and venture capitalists crawl out of the woodwork with can't-lose deals for the newly moneyed. Consider only conservative investments, Card and Miller advise.

Pub Date: 11/10/97

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