Inherited a Check? Here's What to Do with It Next
Depositing an inheritance check might be trickier than you think. Here are your options and smart strategies to take that gift and build lasting wealth.
Imagine this: You receive a check with the proceeds of an inheritance. Whether you were expecting it or not, the question now is: What do you do with it?
And here's where you might run into some problems. If the amount is larger than $10,000, most banks won't accept a mobile deposit. A Kiplinger colleague recently experienced this after losing a loved one and encountered unexpected challenges.
The check arrived, but they couldn't deposit it electronically. Another issue? They didn't live close to any of their bank's brick-and-mortar branches. If you find yourself in a similar situation, here's what to do.
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Ask your bank for solutions
My colleague reached out to their bank, which suggested overnighting the check. If you go this route, send the check via certified mail. Then you can track the package and have proof that the bank received it.
But mailing a large check can be uncomfortable for many, including my colleague. If you don't want to mail your check, contact your bank directly to explain your situation.
Chances are, they'll find ways to work with you. Banks usually set deposit limits based on your average daily balance and account age for both savings and investing accounts like IRAs. Yet, they'll give you more clout when depositing a larger amount.
Other ways to deposit your beneficiary check
Some banks partner with other institutions. This is more prevalent with credit unions. If you don't have a local physical branch, a partner institution might, allowing you to conduct in-person transactions seamlessly.
Another option is to contact the will's executor. Ask them to cancel the check and wire your funds electronically. This can bypass any deposit limits the bank imposes, giving you quicker access to your funds.
My colleague reached out to their brokerage firm for help. The firm eventually decided to send someone to their house to pick up the check for deposit. This is likely a last resort, as many banks don't have the resources or won't offer that service.
Once you deposit your inheritance check, another question emerges: What do you do with the funds?
Buy yourself some time with this step
Proper planning goes a long way to ensure the gift you receive helps you achieve your goals. I recommend opening a high-yield savings account, a money market account or a short-term CD until you decide if there's anything further or more specific you want to do with the funds.
Look for online banks since they offer higher APYs, lower fees and many accept mobile deposits. On the high-yield savings end, here's a smart recommendation:
Money market accounts are great if you want to grow your cash with the purchasing power of a checking account. Keep in mind that some banks set transaction limits, so this account works best for someone who wants guaranteed returns while making minimal transactions.
Meanwhile, a CD locks in a decent rate of return without market volatility thanks to its fixed interest rate. I recommend a short-term option of three to six months or a jumbo CD (if the deposit is $50,000 or more) to earn a sizable return while you figure out next steps.
Use this Bankrate tool to find and compare options fast:
When choosing an account, look for FDIC insurance. This protects your deposit up to $250,000 per account holder, giving you peace of mind.
Once you choose a savings account, do this next.
Set goals to create lasting wealth
Your loved one left you a valuable resource. It's up to you to determine what to do with it. If you haven't been in a position where you've had this much money before, my first tip is to find a reputable financial adviser or personal banker.
When searching for a financial adviser, look for the following qualities:
- Fiduciary designation: This ensures they act in your best interest rather than prioritizing commissions or sales targets.
- Reputation: Read client feedback to gauge trustworthiness. Common complaints across reviews can point to recurring issues you might experience too.
- Personal: Find an adviser who asks open-ended questions about your financial goals and values rather than boxing you into a one-size-fits-all approach.
- Services: Can they cover all of your financial needs, such as retirement planning, tax strategies, asset allocation and estate planning?
- Proactivity: Goals evolve. Look for an adviser who commits to meeting regularly, so they can update plans as priorities change.
One of the best things about working with a reputable financial adviser is that they can take some of the planning off your plate. Once they understand your goals and values, they can tailor a plan to pay off debt, save/invest, plan your estate and address any other financial concerns you might have.
If you don't have an adviser yet, you can use this Bankrate tool to find a reputable one quickly:
Ultimately, receiving an inheritance check can be a challenging process at a time when you're experiencing the fog of grief. However, by following these steps, you can find the right deposit solutions, give yourself time to figure things out and develop a plan that helps you build wealth now and well into the future, as the gift was intended.
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