How to Plan for an Inheritance

If you have recently received or expect to receive an inheritance of any size, the question of how to plan for that inheritance should be of paramount importance to you. An inheritance can improve your financial future, but unfortunately too many people don’t plan adequately, reject the advice of professionals, and end up making tragic mistakes that they cannot repair. If you plan appropriately for your inheritance, you can ensure that you maximize its value to you and the people you care most about, thereby honoring the loved one who left it to you. The right decisions not only leave you with peace of mind and freedom from regret about your financial choices, it lets the giver make the lasting impact on future generations that motivated the bequest.


1. Take the Time to Understand Your Emotions about the Inheritance

For many, grief from the loss of a loved one overshadows any opportunities that an inheritance creates. If you find yourself debilitated by grief, you may not want to look at account statements, and making responsible choices with the inheritance might feel opportunistic. For others, the grieving process leads them to make destructive choices like over-spending an inheritance that really ought to be saved and invested. Still others have deeply seated beliefs that money should be hard-earned, and an inheritance can lead to inexplicable depression and financial paralysis. If you take the time to grieve appropriately and allow the strong emotions to pass, you can separate these debilitating beliefs from your thoughts about the money you’ve received, and to allow the gift of the inheritance to bring lasting value to your life.

2. Understand the Impact of the Inheritance on Your Financial Goals 

How much money do you need in order to retire? Can the inheritance, if invested appropriately, help you get there? Your inheritance may move you closer to your retirement goals, but maybe only if you don’t spend lavishly or even at all. You may choose to do these calculations on your own, or you may choose to hire a financial planner, but do not skip this part of the process. In business, you absolutely must know your revenue and sales numbers, in weight loss, you absolutely must know your caloric intake, and in financial planning, you absolutely must know where you are now, where you want to go, and how fast you’re getting there.

3. Make a Plan 

I strongly encourage to hire a financial advisor to partner with you on this work, don’t go this on your own.  My experience is that people who receive lump sums of money and don’t already have a trusted relationship with a financial professional often regard the industry with distrust and believe they can manage the inheritance on their own. It breaks my heart when people come to see me after they’ve already squandered most, if not all of the inheritance… the nature of a one-time financial windfall is that it cannot be recovered and won’t be repeated. The fees good advisors charge are justified by the value provided to clients whose financial futures we secure with proper planning and professional investing

4. Implement Your Plan

It isn’t until this phase of the process that you will know how much, if any, of your inheritance you can spend and still achieve your financial goals. For many, when we think of receiving sums of money, the process is just two steps—receive and spend. I strongly encourage you not to skip the interim steps I’ve detailed here that will maximize your opportunity to achieve your financial goals. Ultimately, money is just one resource that can help you live the life you want to live, and handling it responsibly can help you achieve everything that is important to you.

If you would like to discuss your personal situation, with no obligation, I’m happy to talk with you and offer my insight.


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