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Wondering what to do with inheritance money?

Published: Tuesday, June 8, 2021 · Last Updated: Friday, June 11, 2021

Inheritances can come in many different forms: personal property, real estate, cars, investments, and more. Determining how to handle an inheritance can be a delicate conversation to have. Anything involving money or something of value is inherently a touchy subject, but it’s even more difficult when that thing is tied to the loss of a loved one. If you’re wondering what to do with your inheritance, it helps to create a plan.

Why you need a plan for handling your inheritance.

The topic of inheritances is important because there can be a lot of complicated tax, legal, and estate rules surrounding inheritances. Handling things properly and in an efficient manner can save you time, energy, and potentially even taxes, and who wants to lose part of their inheritance to the government?

For example, rules surrounding inheriting Individual Retirement Accounts (IRAs) have recently changed and require the entire account to be distributed within 10 years of the deceased individual’s death. This provides a number of unique planning opportunities; individuals could distribute the entire account in the first year, equally over 10 years, wait until the final year, or some combination in between. Each of these scenarios have different tax implications.

Having a plan for what to do with your inheritance helps you move forward.

Planning for inheritances can be extremely important. The more conversations you can have with loved ones before they pass, the better you will feel about how you use the money. Maybe they would like to see you take a trip and enjoy some time off from your stressful job; maybe they would like to see you pay down a mortgage for some peace of mind; maybe there’s a charity that everyone would love to support. Every inheritance situation is different.


One of the most important parts of planning for and properly utilizing an inheritance is having a trusted financial advisor to help guide you through the process. Creating a financial plan to best use the funds to improve an inheritor’s financial life while also honoring the memory of a loved one, can be some of the most invaluable advice an advisor provides. If you would like to make sure your own estate is in good order or you have received an inheritance and would like to create a plan moving forward, Foster & Motley is here to help.  Our advisors have experience with the many aspects of estate planning, distribution, and management and would be happy to talk through your financial goals.