Posted on November 72024 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 thisyou 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 jobyour relationshipsmaybe even your life path. 

On top of all thatyou're supposed to somehow make perfect choices about millions of dollars?

Yeahright. 

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

Luckilyyou 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 sellmanageand grow your inheritance. 

I’m Katherine. I’m a CFP® and a financial advisor for inheritance.

I’m here to help you through this journeywhatever your needs are. 

If you’re trying to get up to speedcheck 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 probatefinancial advisors are mentioning tax implicationsand family members might be sharing their opinions about what you "should" do.

During this phaseyou 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 offyour 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 factit'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 dreambut 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 taxesestate planningand 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 life

• 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 phaseyou:

• 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 inheritanceit 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.

Life inflation trap

Here's a story that might sound familiar: someone inherited $5 million and immediately bought a $2 million house. Sounds reasonableright? 

But she forgot about the $40,000 annual property tax billthe $25,000 in yearly maintenanceand the pressure to furnish it with $200,000 worth of furniture. 

Two years latershe's stressed about money despite having millions. 

The lesson? Life 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 safebut it carries risk over the long term.

Between inflation and missed investment opportunitiesdoing nothing can cost you hundreds of thousands or even millions over time.

You don't need to rushbut 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 inheritancethe requests start rolling in. 

Family emergenciesbusiness opportunitiesand 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 wealthit’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 jobyour locationyour life choices. 

Making major life changes while processing grief and adjusting to wealth rarely works out well. 

Without proper planningthese 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 relationshipsyou'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 sectionI'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 mistakeslet's talk. Schedule a free consultationand 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 decisionsbut 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 (billsmail forwardingetc.)

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 breathit'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 (movingstarting a businessetc.)

• How to educate yourself about wealth management

Remember: This timeline is a guidenot a rule.

 Some people need more time in certain phasesand that's completely okay. 

The key is making thoughtfulintentional 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 documentseven 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.

4. The four questions every inheritor needs to answer after getting an inheritance

Before you make any big moves with your inheritanceyou 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 life. 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" life?

• 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 valuessupporting specific causesinvesting in sustainable businessesor 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 life 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 nowthen 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 faryou'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 buzzwordsjust 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 podcastHeir Necessitieswhere 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 helpyou can download The 20 Inheritance Terms You Need to Knowor reach out to Katherine FoxCFP® and CAP®a fiduciaryfee-only financial planner to learn how Sunnybranch can help you build a plan to managegrowand protect your inherited investments.