What to do with inheritance: a step-by-step guide
What to do with inheritance: a step-by-step guide
You’re here because you’re lost and overwhelmed after getting an inheritance.
I’ve got you. I’m Katherine. I’m a CERTIFIED FINANCIAL PLANNER™, a financial advisor for inheritance, and a fellow inheritor.
Keep reading for ESSENTIAL guidance on what to do after inheriting and my tips for inheritors building a path forward after the death of a loved one.
Posted on November 7, 2024 by Katherine Fox.
What to do with inheritance: a step-by-step guide
Most people think managing an inheritance is about figuring out how to invest.
If you're reading this, you know it's way more complicated than that.
You're dealing with grief while trying to make life-changing decisions.
You're questioning everything - your job, your relationships, maybe even your life path.
On top of all that, you're supposed to somehow make perfect choices about millions of dollars?
Yeah, right.
You need help.
You need information and guidance to put your inheritance into perspective.
You need to learn:
The five phases inheritors go through after an inheritance
The six money mistakes to avoid after an inheritance
How to build a plan for your first year after an inheritance
The four questions every inheritor needs to answer after getting an inheritance
Luckily, you ended up here.
Keep reading for 4 ESSENTIAL steps to take after getting an inheritance
You’re closer than ever to finding answers to your questions and moving forward with a tax-efficient plan to sell, manage, and grow your inheritance.
I’m Katherine. I’m a CFP® and a financial advisor for inheritance.
I’m here to help you through this journey, whatever your needs are.
If you’re trying to get up to speed, check out the 20 Terms Inheritors Need to Know or How to Talking to Your Parents About Their End-of-Life or Estate Plan.
And if you’re deep in the weeds and don’t know what to do next, schedule a FREE consultation to see how I can help you figure out what to do with an inheritance.
1.lFive phases inheritors go through after an inheritance
The Overwhelm Phase (Months 0-3)
This hits right after you get the news about your inheritance.
Your brain is trying to process grief while simultaneously attempting to make sense of complex financial decisions. It's like drinking from a firehose of information - estate lawyers are talking about probate, financial advisors are mentioning tax implications, and family members might be sharing their opinions about what you "should" do.
During this phase, you might feel:
Paralyzed by decisions
Guilty about feeling excited about the money
Overwhelmed by people offering advice
Anxious about making mistakes
Confused about where to even start
The Fantasy Phase (Months 3-6)
Once the initial shock wears off, your mind wanders to all the possibilities.
This is when you might browse luxury real estate listings at 2 AM or research how to start that dream business you've always wanted to build.
The fantasy phase isn't bad - in fact, it's an important part of the process.
It helps you explore what you want from life.
Just don't make any major moves yet. Let yourself dream, but keep your wallet closed.
The Reality Check Phase (Months 6-12)
This is when the reality of managing wealth sets in.
You start realizing that even a large inheritance isn't infinite.
You begin understanding the complexities of taxes, estate planning, and investment management.
This is usually when the "helpful" investment suggestions from friends and family start rolling in too.
The reality check phase is crucial because it's when you start getting serious about learning.
The overwhelm starts turning into focused questions.
The fantasies start turning into actual plans.
The Strategy Phase (Months 12-24)
Now you're ready to make real decisions.
You've processed enough emotionally and learned enough practically to start taking action.
This is when you:
Build out your professional team
Create your investment strategy
Set clear boundaries with family and friends
Start making intentional choices about your lifestyle
Begin thinking about your long-term impact
The Integration Phase (24+ months)
This is where it gets good.
The money starts feeling less like "an inheritance" and more like "your wealth."
You're making confident decisions.
You've got a clear sense of your values and priorities.
The emotional weight starts lifting.
During the integration phase, you:
Feel comfortable saying no to things that don't align with your values
Make financial decisions without second-guessing yourself
Have clear systems in place for managing your wealth
Start thinking about your legacy
Enjoy your inheritance instead of feeling stressed about it
Here's the thing:
Everyone moves through these phases at their own pace. Some people might spend longer in certain phases than others.
That's completely normal.
The key is understanding that wherever you are in this journey - it's okay.
You're exactly where you need to be.
Want to know which phase you're in and what to focus on right now? Let's talk about it.
Schedule a free consultation and we'll map out your next steps together.
4 ESSENTIAL steps to take after getting an inheritance
Keep reading to get educated and ensure you’re not making common mistakes that can trip up new inheritors.
2. Six money mistakes to avoid after an inheritance
When you first get an inheritance, it feels like you've got unlimited resources. But I've seen these six mistakes drain millions from young inheritors' accounts faster than you'd believe.
Lifestyle inflation trap
Here's a story that might sound familiar: someone inherited $5 million and immediately bought a $2 million house. Sounds reasonable, right?
But she forgot about the $40,000 annual property tax bill, the $25,000 in yearly maintenance, and the pressure to furnish it with $200,000 worth of furniture.
Two years later, she's stressed about money despite having millions.
The lesson? Lifestyle upgrades have hidden costs that can snowball fast.
“I’ll figure it out later” approach
Keeping your inheritance in cash while you "think about it" feels safe, but it carries risk over the long term.
Between inflation and missed investment opportunities, doing nothing can cost you hundreds of thousands or even millions over time.
You don't need to rush, but having no plan years after getting an inheritance is still making a choice - and usually an expensive one.
Friends & family bank
Once word gets out about your inheritance, the requests start rolling in.
Family emergencies, business opportunities, and loans that aren’t paid back - can be death by a thousand cuts.
What starts as helping out people you care about can quickly spiral into a drain on your resources that's hard to stop once it starts.
I’m not advocating for hoarding wealth. Giving all your inheritance away is A-OK with me if that’s what you want to do!
This advice isn’t geared towards people who want to redistribute wealth, it’s for those who have trouble saying no and setting boundaries with friends and family.
Identity crisis spiral
Getting an inheritance can make you question everything - your job, your location, your life choices.
Making major life changes while processing grief and adjusting to wealth rarely works out well.
Without proper planning, these emotional decisions can drain your resources and leave you feeling more lost.
Stealth wealth struggle
Finding the right balance with privacy is crucial.
Complete secrecy can lead to anxiety and isolation while being too open invites problems.
Without a solid strategy for handling wealth-related conversations and relationships, you'll either struggle with constant stress or face endless complications from people who know too much about your finances.
DIY disaster
Being successful in your career doesn't automatically translate to being good at managing inherited wealth.
Too many inheritors think they need to become investment experts overnight.
Managing significant wealth is complex - from tax implications to estate planning to investment strategy.
Trying to do it all yourself can lead to costly mistakes that could have been easily avoided with the right help.
Here's the thing:
These mistakes are totally normal and completely avoidable.
They happen because most people have never had to think about managing this level of wealth before.
The key isn't to never make mistakes - it's to avoid the big ones that can permanently impact your financial future.
In the next section, I'll walk you through exactly how to set yourself up for success in your first year after inheriting.
If you're worried you might be heading toward any of these mistakes, let's talk. Schedule a free consultation, and we'll make sure you're on the right track.
3. How to build a plan for your first year after an inheritance.
Getting an inheritance comes with a million decisions, but you don't have to make them all at once.
I’ve got a month-by-month roadmap for your first year designed to help you move forward without feeling overwhelmed.
Months 1-3: Stabilize & Process
Your only job right now is to get stable and start processing what's happening. That's it.
Priority Tasks:
Put inherited money in FDIC-insured accounts (boring but essential)
Start working with a grief counselor or therapist
Gather and organize all inheritance documentation
Create a simple spreadsheet listing everything you inherited
Handle any immediate practical matters (bills, mail forwarding, etc.)
What Not To Do:
Quit your job
Make any major purchases
Promise money to anyone
Rush to hire advisors
Months 4-6: Learn & Explore
Now that you've caught your breath, it's time to start learning - but still no major decisions.
Priority Tasks:
Start interviewing potential advisors (aim to meet at least 2-3)
Read 1-2 basic books about managing wealth
Begin thinking about your values and goals
Create initial boundaries around money conversations
Get clear on any inherited asset deadlines or requirements
Start Asking Yourself:
What does "enough" mean to me?
What role do I want work to play in my life?
How do I want to show up in my relationships?
Months 7-9: Build Your Foundation
Time to start building your wealth management infrastructure.
Priority Tasks:
Select and hire your core advisory team
Get a full tax analysis of your situation
Create your initial investment strategy
Set up your basic estate planning documents
Establish your regular financial review process
Key Decisions:
Which assets to keep/sell
How to structure your advisory relationships
What level of risk feels right for you
Initial thoughts on charitable giving
Months 10-12: Implement & Adjust
Now you can start taking real action and implementing your plans.
Priority Tasks:
Begin executing your investment strategy
Set up your giving strategy
Establish your long-term financial targets
Start thinking about your legacy goals
Start Planning:
Next year's tax strategy
Your long-term career path
Major life decisions (moving, starting a business, etc.)
How to educate yourself about wealth management
Remember: This timeline is a guide, not a rule.
Some people need more time in certain phases, and that's completely okay.
The key is making thoughtful, intentional decisions rather than rushed ones.
Pro Tips for Your First Year:
Keep a decision journal (write down your thought process for major choices)
Save all tax documents, even if they seem irrelevant
Track your emotional journey along with your financial one
Build relationships with other inheritors (you'll need peer support)
Stay connected to your pre-inheritance life and values
Need help customizing this timeline to your situation? Let's talk. Schedule a free consultation and we'll create a personalized roadmap for your first year as an inheritor.
“Your relationship with money started long before your inheritance arrived. Understanding your money story is crucial because it’s driving your decisions - whether you realize it or not.”
4. The four questions every inheritor needs to answer after getting an inheritance
Before you make any big moves with your inheritance, you need clarity on four fundamental questions.
These aren't just quick yes-or-no answers - they're deep explorations that will guide every financial decision you make going forward.
1. What's Your Money Story?
Your relationship with money started long before your inheritance arrived. Understanding your money story is crucial because it's driving your decisions - whether you realize it or not.
Ask yourself:
What did you learn about money growing up?
How did your family talk about wealth?
What financial fears keep you up at night?
What does "being good with money" mean to you?
How has your inheritance changed your money story?
Your money story might include "wealthy people are greedy" or "I don't deserve this money" or "I have to be perfect with every financial decision."
Recognizing these beliefs is the first step to ensuring they aren’t sabotaging you.
2. What's Your Enough Number?
This is about more than just calculating how much you need to maintain your lifestyle. It's about understanding what "enough" means to you on multiple levels.
Think about:
What annual spending would make you feel secure and fulfilled?
How much do you want to keep as a safety net?
What's your definition of "too much" lifestyle?
How much would you need to never work again?
What's your "sleep well at night" number?
Knowing your "enough" helps you make better decisions about everything - from whether to keep working to how aggressively to invest to whether you can help family members financially.
3. What's Your Impact Goal?
Your inheritance gives you power to create change - but what kind of change matters to you? This isn't just about charity - it's about your overall impact goals.
Consider:
What problems do you want to help solve?
How do you want to be remembered?
What role should philanthropy play in your life?
How do you want to influence your community?
What values do you want your wealth to reflect?
Your impact goals might include aligning your investments with your values, supporting specific causes, investing in sustainable businesses, or creating opportunities for others.
Getting clear on this helps you align your wealth with your values.
4. What's Your Time Horizon?
This question shapes everything from your investment strategy to your lifestyle choices.
It’s not just about how long the money needs to last - it's about understanding your life's different chapters.
Think through:
Are you planning to keep working? For how long?
Do you want to start a family?
What big life changes might be coming?
Are you planning to pass wealth to the next generation?
How much do you need for different life stages?
Your time horizon isn't just one number - it's a series of overlapping timelines for different goals. Understanding these helps you structure your wealth appropriately.
Putting It All Together
These questions work together to create your wealth framework. For example:
Your money story influences what "enough" means to you
Your impact goals affect your time horizon
Your "enough" number shapes what's possible for your impact goals
Your time horizon influences how you might change your money story
Take your time working through these questions.
Your answers will evolve as you get more comfortable with your inheritance - and that's okay.
The goal isn't perfect answers; it's greater clarity and intention.
Pro Tip: Write down your initial answers now, then revisit them in six months. You'll be amazed at how your perspective shifts as you grow into your role as an inheritor.
Want help exploring these questions? Let's talk. Sometimes having a thinking partner who understands the inheritance journey can make all the difference in finding your answers.
Taking Action: Your Next Steps
If you've read this far, you're taking the right steps to manage your inheritance wisely. But this is just the beginning.
Here's how to keep your momentum going:
Get My FREE Inheritance Essentials Guide
Download "20 Terms Inheritors Need to Know" - my free guide that breaks down inheritance terms in plain English. No buzzwords, just clear explanations for the most important concepts inheritors need to understand.
Subscribe to my bi-weekly newsletter for inheritor-specific advice and insights you won't find anywhere else
Follow me on Instagram (@sunnybranchwealth) for daily tips and behind-the-scenes looks at how I help young inheritors navigate wealth
Listen to my podcast, Heir Necessities, where I dive deep into the questions you're afraid to ask anywhere else
Get Personalized Support
Ready to create your inheritance game plan? Schedule a free 30-minute consultation with me. We'll talk about where you are in your inheritance journey and explore how I can help you move forward with confidence.
You don't have to figure this out alone. Take one small step today - whether that's downloading the guide or scheduling a call - and start building the foundation for your inheritance journey.
Let’s take the next step together
Understanding what to do with an inheritance is not easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, you can download The 20 Inheritance Terms You Need to Know, or reach out to Katherine Fox, CFP® and CAP®, a fiduciary, fee-only financial planner to learn how Sunnybranch can help you build a plan to manage, grow, and protect your inherited investments.
