Wondering what's going on in the financial markets? George Soros just warned bank depositors again. Learn what his actions mean for your bank deposits.
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The TreeceCo Report
By Tony Treece
One mistake can impact what you pay. One check cashed without having a plan for the money can cost you thousands. Many people will find themselves at the receiving end of an inheritance. Knowing how to handle the money given to you is essential to making it last.
Often times banks, insurance companies, and mutual fund companies are quick to send a check out after the owner of the account passes away. It may be the biggest check you have ever held, and cashing that check may cost you thousands of dollars.
As soon as you cash the check or deposit it into a bank account, you are responsible for paying taxes on it. There are ways to defer paying the lump sum of taxes on inherited money that may be appropriate for your situation.
For example, those funds can be transferred to an IRA, and while the IRS will require you to take required minimum distribution each year, you will only be responsible for paying the taxes on the distribution. This will allow your money to grow, thereby offsetting some of the losses that will be spent in paying taxes each year.
It has been stated over and over that inheritance assets are often spent at breakneck speeds. Perhaps you are planning on leaving an inheritance to your children and are fearful that the money could be spent too quickly. You can actually have control from the grave of how quickly and how much and when each child receives their inheritance money by putting the money in an IRA trust.
Before cashing an inheritance check or leaving money to your decedents, it is necessary to have a plan for where the money will go. As the adage goes, "Not planning is planning to fail." Many heirs have great opportunity given to them, even if it is only several thousand dollars. Squandering the money will result in a disappointing outcome.