When we think about receiving an inheritance, it’s often accompanied by a flurry of difficult emotions.
If we’ve gotten an inheritance, it usually means we’ve suffered the loss of a loved one, and this can be an emotional and turbulent time. Grief is a complex process, and it can take weeks, months, or even longer to fully process the weight of that loss.
During this emotional period, beneficiaries are often faced with the responsibilities of managing what’s been left behind, which can feel overwhelming. There’s paperwork, financial decisions, legal considerations, and often coordination with other family members or heirs — all of which can add stress to an already challenging time.
Here are a few steps to help guide you through the early stages of receiving an inheritance:
1. Pause before making major decisions
One of the most important things you can do after receiving an inheritance is to slow down. There can be pressure (from others or even yourself) to make quick decisions, but rushing may lead to negative long-term financial consequences. Take time to fully understand what the inheritance includes before making any big moves.
A concept called Sudden Wealth Syndrome, attributed to psychologist Stephen Goldbart in the late 1900s, helps explain why this stage can feel so overwhelming. Sudden Wealth Syndrome refers to the stress, anxiety, and even guilt that can come from suddenly receiving a large sum of money, especially when it’s tied to the loss of a loved one. This emotional weight can lead to impulsive spending, strained relationships, or complete indecision.
Having a trusted contact to reach out to during this time can ease the burden on you and help to combat these feelings. A financial advisor can help you create a clear, objective path forward.
2. Understand what you’ve received
People tend to think of inheritances as solely cash, but it isn’t always as simple as a check in the mail. Inheritances can include a wide mix of assets like cash, investment accounts, real estate, retirement plans, or even collectibles. Each comes with its own set of considerations and scenarios.
Certain assets might carry tax implications you weren’t expecting, such as estate taxes, capital gains exposure, or required minimum distributions (RMDs) from inherited IRAs. For example, most non-spouse beneficiaries inheriting retirement accounts after 2020 are subject to the 10-Year Rule, which requires the entire account to be emptied by the end of the 10th year following the original owner’s death, whether you need the money or not.
There are also estate taxes, capital gains, and the step-up in cost basis rule to consider, especially when it comes to selling inherited property or stocks. Understanding these details upfront helps you avoid missteps and gives you a clearer plan for how to move forward with what’s been passed on to you.
3. Establish a game plan
Once you’ve had the time to process your emotions and understand the full scope of what you’ve inherited, the next step is building a clear game plan. This means setting up the right accounts, aligning everything with your goals, and positioning the assets to work for you rather than just letting them sit idle. Whether you’ve received cash, investment accounts, or real estate, you’ll want to intentionally organize and title everything in a way that reflects how you want to use it moving forward.
This is also the time to think about your broader financial picture. Do you want to use a portion of the inheritance to pay down debt? Invest for long-term growth? Create a fund for your child’s education? Or simply add to your emergency reserves? Each decision comes with its own timeline, strategy, and potential tax implications. For example, reinvesting inherited stocks might trigger capital gains, or liquidating certain assets could lead to unexpected taxes or fees. Taking the time now to map things out ensures your decisions are both intentional and informed, not reactive.
4. Monitor the game plan going forward
Just because you’ve got a plan in place doesn’t mean the work is over. Life moves fast, things change, and what made perfect sense when you first set your plan in place might need adjusting down the road. Maybe your goals shift, new opportunities pop up, or tax laws throw a curveball (because we all know they love to). The key is to check in on your plan every so often to make sure it still fits with where you’re headed. It doesn’t have to be overwhelming — just something you revisit with a clear head and a little intention.
We at Rea Wealth recommend at least an annual meeting to review your game plan. We’ll make sure you’re on track, look for changes you might not have noticed, and give you space to ask the “what ifs” as your life evolves. The goal is to use your inheritance to build something meaningful moving forward. The best way to do that? Keep the conversation going, stay curious, and treat your plan as something that grows with you.
At the end of the day, receiving an inheritance is never just about the money. It’s about what it represents. It’s a mix of emotion, responsibility, and opportunity, all rolled into one and it’s your chance to honor your loved one’s legacy while turning it into a part of your own story.
There’s no perfect roadmap for how to handle it, but taking your time, getting organized, and leaning on the right people can make the process a whole lot smoother.
By Max W. Feller
Financial Advisor
This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation. Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.
Securities and advisory services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered by Rea Wealth Management, a Registered Investment Adviser, and fixed insurance products and services are separate and unrelated to Commonwealth.