Receiving an inheritance can be a bittersweet activity. You may be grieving from the recent loss of a loved one, but at the same time you might have inherited a significant amount of money that could make your life better.
We recommend following the first rule as it relates to any amount of money or other assetsyou’ve received—and that is to do nothing. It’s going to take a certain amount of time for you to get accustomed your new financial situation.
You may be inclined to do things with your new assets immediately after you receive them that you would not even consider doing six months to a year later. This “cooling out” period allows you to adapt to having some additional assets. You can take your time deciding how you want to use yourinheritance.
If your inheritance is a result of a spouse passing on, you may want to determine how receiving this inheritance will help you meet your day-to-day needs. If the inheritance is from a parent or other relative, you could envision how the inheritance fits in with your long-term financial goals. In both instances, going slowly is a key to success in your planning.
Receiving an inheritance often means there will be at least a short-term change in your life. We believe it’s helpful if you can determine what that short-term change will mean on both a financial and non-financial basis.
A few things you might want to consider doing during or after the planning stage of receiving an inheritance is:
- Developing a financial plan that illustrates what the inheritance will mean for your financial situation.
- Asking “what if”-type questions about possible uses for the inheritance.
- Asking yourself how the decisions you’re making will make your life better.
- Creating a list of things you might want to do with the money.
- Asking how other loved ones in your life might factor into your inheritance.
- If the inheritance is large enough, asking how the inheritance can influence— in both a positive and negative way— those who are in your immediate sphere of influence.
- Understanding what, if any, outside influences might come to bear on your inheritance.
The key to making decisions after you receive an inheritance is to go slowly. We believe that inheritances can often make your life better if you are thoughtful and thorough in dealing with the event. Having a process to help you through receiving an inheritance as well as with the follow-up planning often simplifies the entire process.