Question: I recently came into my inheritance and I suddenly I find myself with more money than I have ever had to deal with before. I am stressed and overwhelmed. Where do I even start with this? Help!
Answer: Some people imagine that inheriting a large amount of money would be a gateway to bliss—and then it happens to them. Suddenly they discover that having wealth can be very complex. Estate planning, tax planning and investments are each highly technical fields of expertise. You can’t master all of them yourself, so surround yourself with a team of professionals who can help you carry the load.
Your professional team should include a financial advisor, an estate-planning attorney, and a tax professional. You will need to rely on this team, so find candidates with excellent reputations and then interview them to make sure they are people you can actually work with. You are undertaking a big job and you deserve the best. The following ideas should help.
Your financial advisor should be someone with certified expertise, experience, and who will put your interests first. A number of certifications exist, but the most relevant for wealth management is the Certified Financial Planner® or CFP® designation. A CFP® professional has a broad knowledge of personal finance and has demonstrated his or her mastery of relevant principles by passing a rigorous exam and working at least three years in the financial planning industry. Continuing education helps the CFP® professional stay current.
Some financial advisors are fiduciaries. A fiduciary is someone who is legally obligated to put your interests first. You can tell if an advisor is a fiduciary by asking a simple question: Does the advisor or his firm have any incentive to sell me anything? Do they earn commissions, participate in revenue sharing, or receive referral fees? If they do not, chances are the advisor is a fiduciary. If they do, be aware of the conflict. If you choose to work with an advisor who is a fiduciary, the National Association of Personal Financial Advisors is an organization of fee-only financial advisors. Their website (www.NAPFA.org) is a great resource to find advisors who are true fiduciaries.
When considering an attorney, look for someone with expertise in estate planning. The California State Bar Association has a program to certify legal specialists in several areas, including estate planning, trusts and probate. To qualify as an estate planning specialist, an attorney needs to pass a certifying exam, complete at least 45 hours of estate planning continuing education and work in the estate planning field for a sufficient amount of time. The California State Bar keeps a list of attorneys by specialty in each county. We are fortunate in Monterey County to have several excellent estate planning attorneys. You can find a listing of specialists at the Bar Association’s legal specialization website: ls.calbar.ca.gov.
Some CPAs and all EAs (Enrolled Agents) are tax professionals. The best way to find the tax professional you need is to network with your other professionals. Ask them whom they recommend. As you work with your financial advisor and attorney, it will become apparent what expertise you need your tax professional to possess.
Your inheritance is a blessing for you and your family. Assembling the right team of professionals can provide the support you need to properly manage it and fully enjoy it.
Steven C. MerrellMBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey. He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning. Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to email@example.com.