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Goldstein: 4.0Tone: 2.8
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What to Do With a Windfall to Avoid Making Permanent Financial Mistakes
Patience and good advice are the keys to avoiding making permanent financial mistakes in the first year after getting an inheritance.
There's a lot of chatter about the Great Wealth Transfer — as much as $124 trillion that’s predicted to pass between generations over the next couple of decades. And much of that is likely to end up in the hands of women.
If you’re fortunate enough to inherit a windfall, be prepared to be patient. For starters, it can take time to gather the necessary documentation and navigate the legal niceties of inheritance (see our article on where to start if you've received an inheritance). And once you have the money in hand, "rule number one is don’t go out and spend it all," says Alexandra Armstrong, a certified financial planner and author of On Your Own: A Widow’s Guide to Emotional and Financial Well-Being.
Among people who inherit, there’s a tendency to want to do one of two things, says Armstrong: pay off the mortgage on the house or take your dream vacation. But before you do anything, consider the tax implications. For instance, if you have a low-interest-rate mortgage that’s tax-deductible, you may be better off keeping it and putting the bulk of your inheritance to work in other ways. If you inherit your spouse’s IRA, you can roll the money into your own IRA. But if anyone other than a spouse inherits an IRA — say, an adult child or a sibling — the money must be withdrawn over 10 years, and payouts are taxable.
Getting guidance from a tax adviser or other financial professional should be high on your to-do list. A third party can also act as a buffer between you and other family members and friends who’d like a share of the windfall.
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Also, you may not get immediate access to your inheritance. “You can usually count on at least six to nine months to settle even a quick estate,” says Armstrong, and even longer if you inherit something like real estate that must be sold and possibly divided among several heirs.
Take your time: Unless there’s a legal or tax urgency, give yourself time to think through all the variables.
"Don’t make any permanent decisions for at least a year or even longer,” advises Natalie Colley, partner and senior lead adviser at Francis Financial in New York City. Park the money in a money market fund, or leave it in existing investments until you come up with a strategy, says Colley. “Give yourself permission to change your mind."
Getting a windfall can be especially challenging for women who have never played a role in handling their family’s finances. Even women who are involved in day-to-day money management often lack confidence when it comes to long-term investment planning, says Colley. Her advice: "Break it down into bite-sized pieces that you can digest. Repetition helps build confidence and competence."
Bottom line: Any preparation you can do now, either as a giver or a potential beneficiary, will yield a big payoff when the time comes. Take this advice from reader Judith Meservey, a widow who offers support to other widows in her active adult community. Writes Meservey: "I see quite a range of preparedness among the women. I try to encourage couples to be interchangeable when it comes to financial and estate matters, encouraging them both to know how to pay bills, where the assets are and what the passwords are. In my case, I created a document 20 years ago with key information that I update each year for my sister in case something happens to me. It would help someone step in with ease and confidence."
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.
Open article →BBCUnited States
Goldstein: 6.5Tone: 100.0CAMEO 06
What's in the US-Iran agreement?
A US-Iran agreement to extend the ceasefire between the two countries has been signed and is now in effect, a White House official has confirmed to the BBC.
President Donald Trump formally signed the deal - which is set to reopen the pivotal Strait of Hormuz - while attending the G7 summit in Evian-les-Bains in France.
The 14-point agreement, which is known as a Memorandum of Understanding, says that Iran will never have a nuclear weapon, and also commits a $300bn fund for the "reconstruction and economic development" of the country - although the US is not required to contribute. It comes four months after the conflict between the countries - and Israel - broke out.
The agreement has been described by the Trump administration as "performance-based", with Iran benefitting only if it complies with its commitments.
While the text of the deal leaves many questions unanswered - and many key issues unsolved - here's what we know about some of the key points.
Point 1: An end to conflict 'on all fronts'
The first paragraph of the agreement notes that the US, Iran and allies will declare an "immediate and permanent" termination of military operations on "all fronts" - including Lebanon.
From the US perspective, Trump has been growing increasingly concerned that Israeli military operations against Hezbollah could upend the agreement with Iran.
Tehran, for its part, has repeatedly said it expected Lebanon to be covered by the truce.
Any continuation of Israeli military operations in Lebanon would constitute a "violation of the understanding" and "necessary measures will be taken", a spokesperson for the Iranian Ministry of Foreign Affairs said on Wednesday.
The agreement notes that "from now on" neither side will initiate military operations or threaten each other, and ensure "the territorial integrity and sovereignty" of Lebanon.
The final agreement will lead to the permanent "termination" of the conflict, the document says.
It is unclear how Israel will react to this point.
Point 2: Respect for 'internal affairs'
The text of the document - read verbatim to reporters in a call with US officials - notes that the US and Iran will "respect each other's sovereignty and territorial integrity" and refrain from interfering in each side's internal affairs.
This will likely be received negatively by Iranian dissident groups.
Earlier this year, Trump promised Iranian protesters that "help is on the way" during anti-government demonstrations that swept across Iranian cities.
Point 3: An extendable 60-day timeline
According to the third point in the document, the US and Iran will commit to negotiating and achieving a final deal in a "maximum" of 60 days, although that timeline could be extended with mutual consent.
That 60-day countdown has now begun after the leaders of of the two countries officially signed the MoU.
Trump signed the Iran document at a post-G7 dinner at the Palace of Versailles in France on Wednesday night, the White House told the BBC.
It has also been signed by Iranian President Masoud Pezeshkian, according to the White House.
Earlier, both Trump and Iranian officials indicated there would be a formal signing ceremony in Geneva later this week. It is unclear whether that will still go ahead now.
Point 4: US to end blockade
Once the MoU is signed, the US will begin removing its naval blockade and "any disturbances or impediments" that have been placed on Iranian ports, the fourth point says.
The blockade will end fully within 30 days, according to the agreement and the Iranian Ministry of Foreign Affairs. During this time, the number of vessels the US allows through Iranian ports will be in proportion to the traffic being restored by Iran in the Strait of Hormuz.
Within 30 days of a final deal being signed, the US has committed to removing American forces from the "proximity of Iran".
In practice, this means that the US military will return to the posture and assets it had in place before hostilities began on 28 February.
Point 5: Strait of Hormuz
Part of the agreement notes that upon the signing of the MoU, Iran will "make arrangements using its best efforts" to allow safe passage of commercial vessels through the Strait of Hormuz - with no charge.
This has been a significant objective of the US since the war began and the Strait of Hormuz was shut, sending global oil prices spiking.
The document notes that traffic will start flowing "immediately", taking into account the need to remove technical and military "obstacles" and conduct de-mining operations.
The officials in a briefing earlier repeatedly sought to make clear that vessels would not be charged for transit through the Strait of Hormuz.
In the longer-term, the document notes that Iran will work with Oman and other Gulf states to set up a "broader" agreement on how to manage the Strait of Hormuz.
The US believes that Iran will assert its rights "aggressively", but that the Gulf states would "never" accept a future in which there is a tolling system in place, the official said.
Point 6: Money for Iran reconstruction
The sixth point of the MoU says the US and regional partners will develop a "definitive, mutually agreed plan" worth at least $300bn (£224bn) for reconstruction and economic development in Iran.
The final mechanism will be agreed within 60 days of the final deal, and all licences, waivers and permissions will be granted by the US.
However, this does not mean the US will be financially involved.
One official noted that the US is not required to pay "a cent of money" to Iran, or contribute to the fund.
As a hypothetical example, the official said that if Iran "behaves", Emirati authorities could build a power plant in Iran, with US blessing.
Trump and other officials have gone to great lengths to make clear to the US public that it will not be paying Iran directly, which the administration says stands in stark contrast to the 2015 nuclear agreement between Iran and the Obama administration.
Point 7: Sanctions to end
The US will terminate all economic sanctions against Iran, including those included in UN Security Council resolutions and those implemented unilaterally by the US.
The timeline, however, is unclear.
The document notes that the schedule will be agreed upon as part of the final deal, but that both sides acknowledge their intentions to "immediately" address the issue in subsequent negotiations.
Iran has been hard-hit by sanctions, and a US campaign - Operation Economic Fury - has sought to cut Tehran off from the global financial system.
Point 8: No nuclear weapons
Iran has agreed to not procure or develop a nuclear weapon, and both sides have agreed to deal with the enriched uranium Tehran already has.
The method to manage the material is unclear. The document notes that the mechanism "will be mutually agreed upon" in subsequent talks, but that, at a minimum, it will be "downblended" in place under the supervision of the International Atomic Energy Agency, or IAEA.
A senior US official described this as a "minimum standard" and a "major win" for the US.
Trump has said that preventing Iran from having a nuclear weapon was "99%" of what he wanted by launching Operation Epic Fury earlier this year.
Because the US has described the deal as performance-based, the sanctions relief specified in point 7 is tied to Iran complying with point 8.
Points 9 & 10: A 'status quo'
The following two parts of the agreement specify that the US and Iran agree to a "status quo" of its nuclear programme in the meantime, until the enriched uranium can be dealt with.
In practice, this means that the US will not impose new sanctions. In the meantime, it will issue waivers for the export of oil, petroleum products and other associated services, such as banking transactions and transportation.
Point 11: Frozen funds
This point has been a significant impediment to negotiations.
Iran had long insisted that its frozen assets be released, offering the country another eco
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