How to Claim an Inheritance from Abroad
Claiming an inheritance from abroad can be confus-ing and overwhelming. Learn what steps you need to take so the funds will appear in your account.
Expecting an Inheritance? Here’s What You Need to Know
Expecting an inheritance? Here are answers to questions you may have when receiving an inheritance. Excerpt from, and link to The Inheritance Book.
Should You Leave Your Children an Inheritance?
If you leave your children an inheritance what will they do with it? Will they save or squander it? Here’s how to teach your heirs to use the lump sum wisely.
Why Receiving an Inheritance is Difficult: It’s not “free” money
Receiving an inheritance can be an emotionally fraught time. Learn what you should do to facilitate a smooth transfer of assets
How to Avoid Inheritance Anxiety
If you get a sudden windfall, how do you avoid inheritance anxiety and make the right decisions? This blogpost explains the steps you need to take.
Why Getting an Inheritance Doesn't Always Make You Rich
Getting an inheritance will not make you rich unless you use it wisely. Read this to find out about the mistakes you need to avoid.
“Over My Dead Body!” Use a Will or Trust to Help Avoid Battles over Your Estate
A will or trust can prevent long, expensive court battles over your estate assets. Find out which would be more appropriate for your situation.
The Things Not to Do With an Inheritance
By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel
When you get an inheritance, your first question may be, “What should I do now?” But perhaps a better question is “What shouldn’t I do now?”
An emotional rollercoaster
Getting an inheritance arouses many emotions. Sometimes, people get too excited and they spend all the money without thinking about the best uses for it. Others feel uncertain that they know how to manage the wealth they just received. Their fear paralyzes them, preventing them from making good investment decisions.
What are the mistakes to avoid?
When you get an inheritance, try not to let the tangle of emotions interfere with making the right choices. Avoid the following:
Impulse spending. While you may have always wanted a luxury car, designer jewelry, or the latest technological gadget, step back and ask yourself if these are really the best uses for your new wealth. Sometimes there is an additional cost to an item beyond its price tag – can you afford the ongoing costs of maintaining a new acquisition?
Get-rich-quick schemes. While it may be prudent to invest some or all of your inheritance, don’t get blinded by your desire to make as much money as possible. Many offers of “high returns” that sound too good to be true often are. Sometimes preservation of wealth is more important than growth. Consult your financial advisor before making any investment decision, since their objectivity and knowledge can alert you to scams and unrealistic expectations.
Fear and anxiety. Don’t be too frightened to take some risks. The problem with conservative investments is that low interest rates may not beat inflation, so in the long run, your money may lose its real value. A financial advisor can help you assess your situation and suggest suitable investments.
Greedy/Needy friends or relatives. If you are approached by gift/loan requests, don’t feel pressured into agreeing. First make sure that your own future is financially secure, and only then weigh the merits of the request.
What should you do now?
There are positive ways to use your inheritance. For some more information on what to do after you receive an inheritance, join my free webinar. Register at Profile-Financial.com/webinar
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
The Best Way to Update Investments in an Inherited IRA
By Douglas Goldstein, CFP®, - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
If you inherit an IRA (Individual Retirement Account), you must be aware of the regulations concerning transferring the account to you, the “beneficiary.” Apart from the technical requirements for processing the account, which a financial advisor should be able to handle, some people also feel a moral responsibility.
When a client recently called me about an inherited IRA, he said, “I would like to sell some of the stocks in the account. Am I legally allowed? And if I do, am I being disloyal to my father’s memory by getting rid of what he bought?”
Personal finance is personal
This client is far from unusual in the loyalty he feels to his benefactor. Many beneficiaries feel as if they are betraying the person who left them the account if they change anything in it. But that is far from being the case.
When choosing investments, you need to have your own goals in mind, rather than those of the deceased, which may have been quite different. I told my client, “I’m sure your father wanted the best for you, which is why he made you beneficiary. Improving the IRA’s portfolio by acquiring investments that are more appropriate for your situation isn’t being disloyal. It’s actually the best way to make the most of the inheritance.”
How should you optimize the investments inside an IRA?
If you sell investments inside an inherited IRA, you don’t pay U.S. tax on capital gains until you withdraw the money. Be aware that generally you shouldn’t hold an annuity or other tax-advantaged investments like municipal bonds in an IRA. Furthermore, if you’ve made aliya, if you transfer the funds out of an IRA to an Israeli investment account, the funds immediately become taxable and would lose their U.S. tax benefits.
Not sure how to properly protect an IRA that you inherited? Go to Profile-Financial.com/inheritedira.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
How to Overcome the Challenges of Receiving an Inheritance
By Douglas Goldstein, CFP®, - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
What would be your first reaction if you received an inheritance?
When a client received an inheritance from her elderly aunt, she told me:
“I thought she was going to leave everything to my cousin. I never imagined in my wildest dreams that any of it would come to me. Although the extra money will come in useful, I don’t know what to do with it! I spend my nights worrying about whether I should invest it or if I can spend any of it.”
You are not alone
This client’s anxiety about what to do with an inheritance is not unusual. Strange as it may sound, many people who receive an inheritance or windfall worry about losing their new assets, and this fear paralyzes them. Other people go to the opposite extreme and spend it all without a second thought.
Another common problem that inheritors face is when other people somehow find out about their new wealth and want some of it. In the same conversation, my client told me:
“When a distant cousin heard that I’d been included in my aunt’s will, he called me up for the first time in over 20 years and begged me for a sizable loan to start a new business. What do I tell him? It’s hard to say no to family.”
Get some answers
Since people often ask me questions on what they should do after they receive an inheritance, I created a 20-minute online webinar called, “How to Invest an Inheritance.” The webinar addresses the following points:
Register for the webinar at: Profile-Financial.com/webinar so you’ll know what to do if you receive an inheritance.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Estate Planning: What Happens to Your Money After You Die?
By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
One of the most important issues in estate planning is what happens to your money after you die. How quickly your heirs receive the inheritance depends largely on your estate planning. (If you’re having any difficulties with an inheritance, please email me at doug@profile-financial.com.)
3 things to consider when planning your estate
When setting up U.S. IRA and brokerage accounts for clients who live in Israel, I ask them to consider what will happen when they no longer need their money. Here’s where to start:
When clients pass away, we work with the family and guide them step by step through the money transfer. If you have questions about handling your estate, send me an email (doug@profile-financial.com) or call (02-624-2788) and let’s begin a conversation about how to make the right moves.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
How to Avoid Tax Mistakes When You Receive an Inheritance
By Douglas Goldstein, CFP®
When receiving an inheritance, it’s important to avoid making tax mistakes. Certain tactics, such as opening a U.S. brokerage account (see below for an interactive tool) can help. Watch out for these mistakes:
Mistake #1 – Taking money out of an IRA
To maintain the tax-deferred status of an inherited IRA (Individual Retirement Account), the money must remain in a specially titled account. As an heir, you can transfer the IRA into a “beneficiary IRA” (a.k.a. “stretch IRA”) and not pay taxes on the account’s capital growth until money is withdrawn. Transferring the money overseas jeopardizes the tax beneficial status. As many overseas bankers and investment advisors may not know this crucial piece of information, work with professionals who are well-versed in cross-border investing and tax law.
Mistake #2 – Choosing the wrong investments for an IRA
The IRS allows U.S. citizens not to pay capital gains tax (or tax on interest and dividends) when they sell stocks for a profit inside an IRA. Since you don’t pay capital gains tax on profits, your growth is compounded, because you’re not giving a piece away every year to the government. Generally, annuities, municipal bonds, and other tax-advantageous investments should not be part of an IRA.
Mistake #3 – Not strategizing for estate tax
American citizens who bequeath their estates to their American children are exempt from estate tax if the estate (as of 2015) is under $5.4 million. If you think your future inheritance will be above that amount, strategize with your investment advisor and tax professional to minimize potential taxes. If you live in a different country than your beneficiary, make sure that your strategy includes avoiding tax mistakes.
If you think you might inherit an American IRA, use this free interactive tool to help you realize why opening a U.S. brokerage IRA account may be a good tax saving strategy. Try it at www.Profile-Financial.com/Interactive and then call our office with questions (02-624-2788).
Doug Goldstein, CFP® is the director of Profile Investment Services, Ltd., a firm that specializes in cross-border investing and helping people open U.S. brokerage accounts from overseas. He is a licensed financial advisor both in America and Israel, and does not give tax advice. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Call 02-624-2788 for a consultation about handling your U.S. investments from Israel.
How to Make the Most Out of Your Parents’ Stocks
By Douglas Goldstein, CFP®
What should you do if you inherit a portfolio of stocks from your parents?
Should you sell them?
To answer the question of whether you should sell the stocks, start by asking yourself whether you would buy these stocks if you had extra cash.
You have no moral or legal obligation to keep the positions just because your parents owned them. I’ve had people come into my office with stocks that their parents bought decades earlier, and they said, “My father said this was such a great company that I should never sell the stock.” But how could anyone have known whether a company that was in business 10 or 20 years ago would still be a good investment today? Remember Pan Am, Blockbuster, or Enron? Even though your father’s research many years ago suggested that a company would be a good buy, times have probably changed.
What about the tax I’ll have to pay?
Everyone is in a different tax situation, but people who live and die in the United States benefit from an IRS rule called the “cost-basis step-up.” That means that if your father invested $1,000 in the stock and the value of that position grew to $100,000 on the day of his death, if you sold it the following day for $100,000, the IRS would not consider the transaction as if you had just profited by $99,000. Instead, they reset the purchase price of the stock to the value at which you inherited it ($100,000) so you would not have to pay capital gains tax. [This is an overly simplified example, and depending where you live, there could be other taxes associated. Be sure you get proper tax advice before making any trades.]
If you receive the stocks in a U.S. brokerage account or Individual Retirement Account (IRA), you may need to follow certain specific steps in order to take control of them. Feel free to contact our office if you have questions about dealing with an inheritance (02-624-2788).
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Do You Suffer from “Inheritance Loyalty Syndrome?”
by Douglas Goldstein, CFP ®
It is common to feel emotional angst after receiving an inheritance. Inheritors may have doubts as to whether they are “allowed” to use the assets as they wish, or whether they somehow have to use them in a way the benefactor would have chosen to use them.
There are two ways to approach a sudden influx of money into your control:
Selling inherited assets is not being disloyal
Some beneficiaries feel an emotional attachment to the inherited assets that prevents them from making logical decisions. A widow may feel that she is disputing her late husband’s judgment by selling stocks he carefully chose years ago.
Yet what was good for your benefactor is not necessarily good for you, as everyone’s financial situation is unique. It is important to realize that inherited funds are yours, and proper use of the funds means making them jive with the rest of your financial plan. Your benefactor gave you a legacy to use as you wish; s/he can’t control the assets from the grave.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates
What Should You Do When You Get An Inheritance?
By Douglas Goldstein, CFP®
Many of my client relationships began as a result of receiving an inheritance. The sudden infusion of money is a good impetus for a review of one’s goals.
The first thing to do when you get an inheritance is – nothing. There’s usually no rush to spend or invest the money. Let the pain you may feel at losing a loved one and the excitement of “coming into money” die down. Before you make any decisions about what to do, make sure you’re in a calm frame of mind.
Explore your options
Once you are ready to make some decisions, the next step is to figure out what you really want. Some people immediately use an inheritance to realize a material dream and buy a house, car, or go on a luxury vacation. The problem is that many of those who rush into spending an inheritance often find that in the flurry of excitement, they end up spending more money than the original bequest.
While there may be nothing wrong with spending an inheritance, be wary of compartmentalizing your finances. Look at your overall financial picture. Should you use the funds to pay off existing debt? Create an emergency fund? Save for anticipated future expenses like tuition, weddings, and retirement? And if the answer is “yes,” how will you do it?
Be realistic as to what the lump sum you received can actually do. Even a six-figure infusion of funds may not stretch as far as you think it will. And Americans who inherit IRAs need to be aware of tax regulations affecting the way they can withdraw funds.
Maybe the most important thing you can do when you receive an inheritance is assure your children that it may or may not be passed on, so they should work hard and secure their own financial house.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
How Quickly Should You Invest The Money You Inherit?
By Douglas Goldstein, CFP®
Though I often advise people to wait before investing an inheritance, sometimes you must take quick action.
When do you need to act quickly?
If you inherited a risky position, you should consider liquidating it. For example, the grandfather who always managed the stock portfolio passes away, leaving large amounts of money invested in a few individual stocks. Unable to live on her own, the grandmother who now owns the stock portfolio needs to move to a nursing facility. What would happen if she waited 12 - 18 months to deal with the account and then, just before she sold in order to pay her bills, the stock market crashed?
How much money do you need now?
If you inherit a portfolio of stocks, ask yourself if you are in a position to wait (possibly for years) to use the money. A fancy car or a luxurious vacation is not an emergency expense. On the other hand, paying for home health care or other medical procedures may very well be a question of life and death and cannot be delayed. Any money needed for the near future, regardless of the type of investment it was in when you inherited it, should be converted to liquid assets like short-term bank deposits, money market funds, and savings accounts. If that means selling Grandpa’s stocks, it’s the right choice. After all, wealth should first and foremost be used for your family’s health and well-being.
How to get the money quickly
Depending on the account’s structure, you may or may not have easy access to the funds. Even if an account is titled “joint account” or “transfer on death,” there may be a drawn out procedure to follow before the money is fully available. Your investment advisor should be able to walk you through the process. Nonetheless, make sure money is available to each spouse separately so that the survivor does not face undue financial pressure caused by bad planning.
Not sure how to structure your accounts?
If you have assets, especially money in different countries, contact a cross-border investment advisor who can help you determine the best way to structure your portfolio. Learn more at www.Profile-Financial.com.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. His best-selling book, Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is available at online, at bookstores, and at www.RichAsAKing.com. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.