Ten Things to Do When You Receive an Inheritance

The sharp rise in property prices have left most people waiting for an inheritance before they can buy.

Receiving an inheritance can be financially life altering and while it comes with so many negatives, there are also so many positives for your future.

Nobody wants to sit and plan what they should do when they get into money when a loved one dies, but knowing what you should do when you receive an inheritance can help you with distributing that wealth evenly and making sure that it lasts. As fun as it can be to go and buy a luxury yacht, it might be fun to think about what you should be doing to ensure that your inheritance doesn’t go down the toilet at the moment you get it. With that in mind, let’s take a look at 10 things you do when you receive an inheritance.

1. Take a moment. There’s no rushing into any decisions once you receive a lump sum of cash. Receiving an inheritance comes with some emotional baggage and guilt attached to it, because in almost all cases you’re going to have received it because of the demise of somebody close enough to you to warrant giving you the inheritance in the first place that can be apparent, a grandparent, an aunt, or a sibling. You can sit on that money for a while before you decide what to do and allow yourself to grieve first.
2. Get some advice. When you are ready to start spending, go and see a financial planner. Depending on the value of the inheritance that you’ve received, you need to have a coherent plan that allows you to find balance between securing your future and having some fun. That’s where the luxury yacht comes in. Sitting down with a financial advisor is a good decision because you may have other obligations such as taxes to pay. They’ll be able to help you to address the challenges that you face when it comes to your finances and avoid any pitfalls
3. Be conservative in your spending at first. If you have never had much experience managing money before this inheritance, then you need to develop a strategy to be conservative at the beginning. You need to get comfortable with your new found wealth and that plan can be adjusted over time. Financial plans are never really set in stone, but it’s nice to have a guideline which you’ve worked through with your financial advisor. Being conservative by putting some money into a savings account or into a trust is a good start, and from there you can then decide what you’d like to spend it on.
4. Paying down some debts. This is a common approach and it should be the first thing that you do if you are sitting on debt but then you’ve received an inheritance. If you have high interest debt such as credit cards or personal loans, paying these down can help you to move on with your life and future without the burden.
5. Consider an investment strategy. Depending on the size of the inheritance that you’ve received, you may want to consider a strategy that lasts you for the next 30 years. There should be a balancing act between long term and short term financials, so you need to think about what you can do to see the future and then move forward with that plan. Investing in something that can return money to you in the next 10, 20 or even 30 years is a good and smart decision to make with an inheritance.
6. Be open to ideas. If all you’ve known is poverty and you’ve come into money, it may be very tempting to just splurge the cash. You might have heard that shares are risky, or you may have only ever had experience investing in property before. Being open to fresh ideas with the help of a financial advisor is a good decision. They may advise you to put some more money into your pension or your superannuation, depending on where you live in the world. There are so many different ways that you can also invest money and different ownership structures that help you to do it properly. Taking the right advice is a good decision here. Being open to new ideas will give you new places to spend your inheritance.
7. Decisions don’t have to be made overnight. Most people believe that there has to be a binary choice between enjoying the money now or delaying it and investing in the future. But it doesn’t have to be that complicated. You can have both. You can invest some of the inheritance in a way that allows for a long term money generation, and you can spend some in the short term to allow yourself something nice for your personal use.
8. Invest in yourself. One of the best things you could do with an inheritance is invest in your own future. Maybe go back to school and pay for college that way, or retail into a new career. You can pay off your mortgage or put some college money away from the kids, too. Investing in yourself is important because it’s one of the best expenses you could have.
9. Look over your will. Using some of the inheritance to get an estate planning in order can be a good decision and it’s something that’s very easy to put off. Usually if you have an inheritance with life changing money then getting your will sorted is vital for the rest of your family. You don’t want to die without a will and find that all of that inheritance goes to the government.
10. Consider some charitable giving. Philanthropy may not have ever been in your plan before because you never had the finances to do it. But if you’ve paid down your debts and you’ve put money into long term investments and you’ve then gone ahead and bought the yacht, then look at philanthropy and giving to see whether or not you can do more and give back.