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What to Do When You Receive an Inheritance

By Marjorie L. Rand, CPA, CFP®, RICP®

If there is one thing that must be managed wisely, it’s your wealth, assets, and, most importantly, an inheritance. At Rand Financial Planning, we think it is important for you to have the necessary tools required to take on any financial challenge, whether it’s investment planning or preparing for retirement. 

Before I took the leap into financial planning as a Certified Financial Planner, I spent years as a Certified Public Accountant and enjoyed helping people avoid costly mistakes with their money. As a tax-focused advisor, I’ve helped my clients understand their financial situations to develop a sound tax strategy. So when it comes to something as complicated as an inheritance, I understand how to unpack those too. My extensive background in estate taxation and administration has enabled me to provide valuable assistance to executors and heirs.

Receiving a large inheritance can be a bittersweet experience. You’ve lost someone close to you, but this person also believed that you would take their assets and honor their legacy long after they have passed. It’s important to remember that wisely managing an inheritance involves many new challenges and you need to be aware of them so you can make educated and informed decisions.

Save Time to Mourn Your Loss 

The process of receiving an inheritance comes with many mixed emotions. This can include feeling overwhelmed and devastated due to the loss of a loved one. Sometimes anxiety can cause you to mismanage your day-to-day routine, your health, and even your finances. 

This is why it’s advisable that you take a few steps back and observe your situation as an outsider. By doing this, you can help ensure that you’re not making rash decisions that could significantly affect your current situation. It might be tough, but you may need to take a couple of months to plan extensively to thoroughly understand the nature of your inheritance. Only then are you able to see your situation through a clearer perspective so you can make the most out of it as your loved one wished. 

Have an Idea of What You’re Inheriting 

Before making any drastic decisions, you should do some research. Part of this research includes finding out exactly what it is you are inheriting. Knowing this will improve your chances of handling your inheritance properly. 

For instance, if you inherit a real estate property or home, you have the option to rent it out, sell it, or move in. If the inheritance is in the form of an investment such as stocks or bonds, then you might consider selling the shares or holding on to see their potential growth. 

Protect Your Inheritance From Heavy Spending & Taxes 

You should always be spending your inheritance carefully, because once it’s gone, it can’t be recovered. One thing you should always guard against is uncontrollable spending, and the best way to do this is by reminding yourself constantly of the hard work that went into building such wealth. Additionally, you should physically block your inheritance from being spent or affected by putting it inside a trust or an inaccessible savings account so you won’t just transfer it into your checking for meaningless spending. 

On the other hand, you should also be aware of the tax liability of your inheritance. Taxes can take a huge toll on your inherited cash and investments, so it’s important to consult with a tax-focused financial planner you can trust with your inheritance. 

We Can Help 

One key advantage of aligning yourself with the above principles is that you are more likely to manage your inheritance properly. You can empower yourself and strengthen your ability to handle even the most difficult financial challenges. We at Rand Financial Planning, LLC can address your concerns about your inheritance, investment planning, securing a tax-efficient retirement, and so much more. 

Schedule a 20-minute introductory call or reach out to us at 908-895-2406 or marge@randfinancialplanning.com to see if we are the right firm to help you on your financial journey.

About Marge

Marjorie Rand is founder and financial advisor at Rand Financial Planning, a comprehensive, fee-only, fiduciary financial planning firm. Marge specializes in helping her clients plan for a secure retirement and navigate life’s many transitions through customized, tax-efficient retirement planning. She is passionate about empowering her clients to make the best financial decisions for their life and being by their side no matter what life throws at them. Marjorie spent many years as a CPA before founding Rand Financial Planning so she could be a go-to source for all her clients’ financial needs and help them avoid costly mistakes. She has a bachelor’s degree in accounting from Rutgers University and a Master of Science in Taxation from Fairleigh Dickinson University, along with the Retirement Income Certified Professional® (RICP®) and CERTIFIED FINANCIAL PLANNER® (CFP®) designations. When she’s not working, Marge enjoys boating, horseback riding, traveling, and hiking with her husband and her dog, Rangeley. To learn more about Marjorie, connect with her on LinkedIn.
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