How To Handle An Inheritance Responsibly


10,000 Americans turn 65 each day – a very matter of fact reminder that while it’s not pleasant to think about, our parents are getting older. And with their inevitable ageing and eventual passing comes the possibility of receiving an inheritance. Many of us find ourselves in this situation much sooner than we would like. But the fact remains that for many of us, this will be our reality. Studies show that millennials (individuals born between 1980 and 2000) are poised to inherit 30 trillion dollars over the next 30 years. The money is coming to us, but are we prepared to handle it responsibly?


If there is one thing we hear from almost every single client who’s received an inheritance, it’s that they don’t want to waste the money. They want to do something meaningful with it – something that honors the loved one who has passed and quite frankly, we couldn’t agree more. In this post we’ll explore what to do with an inheritance responsibly.



Get this, studies show that most people blow their inheritance within five years!! Considering this is the exact thing most of us are trying to avoid, it’s a perplexing phenomenon. So here are some tips to consider when you want to be responsible with your inheritance.


Most articles end by recommending that you should talk to a professional. We begin with it and here’s why.


You don’t know what you don’t know. A Financial Planner is a great place to start. Make sure they are a fiduciary which means they have to put your interests first! With your new, sizable bank balance, you will quickly become prey to the large investments firms who will want to take your money and invest it or worse sell you high-commission financial products (read: annuities).  More than likely, those will not be the best decisions for you. By working with a Financial Planner that charges a flat-fee, you can feel comfortable knowing that they are addressing your situation in an unbiased manner. At Stash, we say,  “investing for the sake of investing is just gambling”. You need a plan to help decide how to allocate the funds. You’ll also want a planner who can address any tax implications of receiving the inheritance.


When you receive an inheritance, you will likely be in an emotional place. And emotions and money are two things that NEVER mix well. You should be weary of any financial professional who pressures you into making snap decisions. Finding someone who is willing to answer all your questions and provide the necessary education to help you make good decisions is what you’re looking for.


The point of working with a Financial Planner is to begin to lay out some goals for the money. They will help you think through the various goals you may have. You might start by thinking about setting yourself up with a rock solid financial foundation. Maybe part of the inheritance can go to establishing an emergency fund. Maybe some can go towards paying down credit card debt or high-interest student loans. Once your foundation is set, you might think about putting some of the money towards your future security (i.e. retirement). Once your short and long-term goals are properly addressed, we recommend you start thinking about mid-term goals like buying an apartment, starting a business, planning for your family and even donating to charity.


The best part about doing it this way is that once a financial planner understands your current situation and your goals,  you will have peace of mind knowing that they are directly you in accordance with your priorities.


While we highly advocate taking your time before making decisions, try not to avoid making decisions. Because of how jarring the emotional aspect of receiving an inheritance can be, people often make the mistake of not doing anything at all. Some feel it’s not right for them to make changes to the investments (“my grandfather used to work for UPS and so I wouldn’t feel right to sell the stock”) – which leaves them with investments that were selected for someone MUCH older than them and in a completely different financial situation. Doing nothing is almost as irresponsible as wasting it away. Take your time, but then take action! Being responsible means not ignoring the decisions that need to be made.


We are here to help.


**Stash Wealth offers a fee-only financial planning service called the Stash Plan™. Learn more.

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