Receiving an inheritance can be an exciting prospect, but it can also be very overwhelming if you don’t know how to manage it properly. Enlisting the support of experienced experts as soon as possible, such as a CPA and financial planner, can give you peace of mind that you have done your necessary due diligence.
Two of the most important things that you can do are to create a plan and to avoid thinking of this as only found money.
Creating a plan is phase one because this allows you to think in the bigger picture about the goals that you intend to accomplish and how the recently received inheritance can help to support those. The second step is to avoid mental accounting. You should treat new money received through an inheritance just as if it were earned income.
Unfortunately, people often tend to view money that they’ve inherited as found money that they weren’t anticipating and are therefore more likely to spend it on discretionary items. It’s also very common to think about this inheritance money as separate from your own previously earned money.
Make sure that it is integrated with your existing financial plan and that your financial priorities are met. Start by paying off long-standing debts like student loans or credit cards and then work to build an emergency fund that will help support you during unforeseen circumstances. Make sure you also have accomplished your own estate planning goals by scheduling a consultation with an estate planning attorney.