Receiving an inheritance is often bittersweet. Whether it comes from a parent, spouse, or close family member, it’s not just a financial event — it’s an emotional transition.

Inheriting money, property, or investments can bring uncertainty. What should you do with it? Should you invest it? Pay off debt? Keep it as-is?

Here’s how to approach an inheritance with clarity, calm, and confidence, starting with what not to do.

Don’t Rush Into Decisions
When money comes in quickly — especially during a time of loss — it’s tempting to take immediate action.

Pause first.
Give yourself space to grieve, process, and think before acting. The best decisions are rarely made under stress or pressure — and most financial options don’t expire overnight.

What you don’t do in the first 90 days is often more important than what you do.

Step 1: Understand What You’ve Inherited

Not all inheritances are the same. Before making decisions, gather the full picture:

• Cash or CDs – May be used or moved immediately
• Investment accounts – Subject to tax rules and titling changes
• Retirement accounts (IRAs, 401(k)s, etc.) – May have Required Minimum Distribution (RMD) rules
• Real estate or business interests – May require valuation, sale, or management
• Trusts – May have specific terms or restrictions
• Life insurance proceeds – Typically tax-free, but often large

You’ll want to work with a financial advisor, CPA, or estate attorney to understand ownership, taxes, and timelines for each type of asset.

Step 2: Build a Plan — Not Just a Reaction

Once you’ve clarified what you’ve received, the question becomes: How does this fit into your life and financial plan?

You might use inherited money to:

• Pay off high-interest debt
• Boost retirement savings
• Start or support a business
• Set up an education fund for children or grandchildren
• Give to a cause that mattered to your loved one
• Create passive income through investments or real estate
• Simply shore up your emergency fund or lifestyle cushion

The key is alignment. A sudden windfall should be integrated into your broader goals — not left drifting in a separate account.

Be Aware of Tax Rules

Depending on what you’ve inherited, there may be tax considerations:

• Step-up in cost basis may reduce capital gains taxes on appreciated assets
• Inherited IRAs or 401(k)s may have 10-year distribution rules (for non-spouses)
• Trusts may be taxed differently depending on structure
• Real estate may have property taxes or liquidity issues
• State inheritance or estate taxes could apply in some cases

An advisor can help coordinate tax strategy before you trigger unintended consequences.

Step 3: Create Intentional Structure

If you’re not ready to make big decisions, that’s okay. But don’t leave a large sum sitting in a checking account indefinitely.

Instead:

• Set aside short-term needs in a high-yield cash reserve
• Create an investment strategy for medium- and long-term goals
• Consider segregating the inheritance from daily spending to avoid emotional leakage
• Document a plan that reflects your loved one’s legacy — and your current life season

This is where a financial planner can bring clarity: turning a moment of disruption into a long-term advantage.

You Don’t Have to Navigate It Alone

Inheriting money is a mix of responsibility, opportunity, and emotion. You may feel pressure to “do the right thing,” but what’s right depends entirely on your life, values, and goals.

At FIS, we help families like yours approach inheritance with purpose. We guide clients through what to keep, what to change, and what to plan for next — with care, compassion, and clear planning.

Want to talk through your inheritance plan?

We’re here to help. Talk to a financial advisor and explore how to honor what you’ve received and use it to build the life you want.

This content was created with the assistance of artificial intelligence (AI). While efforts have been made to ensure the quality and reliability of the content, it is important to note that AI-generated content may not always reflect the most current developments or nuanced human perspectives. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance does not guarantee future results. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Any opinions are those of Forman Investment Services and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

RMD’s are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation.