Six tips to handling your newfound inheritance

Losing a loved one and coming into a large lump sum of money can create a diverse range of emotions. More than likely, your inheritance is one of the largest sums of money you have found yourself possessing and you might not know what to do with it. According to Consumer Reports, about “80 percent of all inheritances are spent within 10 years” [1]. So how can you cope with the loss of a loved one while responsibly handling your inheritance?

Last will and testament document

1. Take a deep breath.
Before you make any rash decisions, take some time to allow what has happened to set in. There are many emotions circulating through your head and you don't want this to cloud your decision-making skills. Give yourself a waiting period before you do anything with the money; U.S. News suggests about three months.

2. Talk to a professional.
Figuring out your long-term financial plans and needs can be difficult to handle, so consider talking to a financial advisor. They can help analyze your short-term and long-term needs and advise you of the best ways to spend your money [2].

3. Pay your debts.
Student loans have been following you around for as long as you can remember. For many people, minimum payments are barely covering interest rates, making it almost impossible to pay off loans. Now is the time to help get rid of them. If after talking to your financial advisor you find that you have the money in the budget, consider paying off some of your student loan debt. If you don't have any student debt to pay off, consider taking a crack at your mortgage [3]. Any large payments that you can help pay off now can be helpful in the long-run.

4. Save away.
Not all of the money that you inherit needs to be spent. Consider maxing out your 401k or saving a portion in an interest earning savings account. If your emergency fund needs some help, consider placing a portion to help save for a disaster [3]. Saving now can help ensure that you will be able to benefit from your money for many years to come.

5. Think about taxes and fees.
Don't take your inheritance assets at face value. Consider all the things that can affect your money. For example, if you have to sell a home you will be paying real-estate fees [1]. Talk to your financial advisor for more fees associated with your specific inheritance case.

6. Satisfy your craving to spend (a little).
Once you have figured out what you have left-over, it's alright to enjoy some of the money. Toast a glass of wine in your loved-one's honor, and go on a weekend getaway. Be cautious of spending sprees though-don't buy lots of things just because you can. Think over your purchases for the best option for you.

[1] How to handle an inheritance
[2] How to Responsibly Handle an Inheritance, Nerd Wallet
[3] The Right Way to Handle an Inheritance, U.S. News

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