“Really, the first thing to think about is guidance,” says Brunner. “You don’t need to do this all by yourself.” While much depends on your inheritance and whether you have a role as executor in the estate, experts to consult early on may include an attorney versed in estate administration, an accountant and your Financial Advisor, Brunner says. “They’ve been through this before, and they know what to expect. They can help you create a road map for the future.”
If you are executor, one of the key tasks your advisors can help with is collecting and organizing all of the information about the estate, financial and otherwise. Although estate taxes generally aren’t due until nine months after a person’s death, collecting relevant information should start sooner, as it may take time and patience to amass everything you need. Some examples: You’ll want to know about insurance policies, pension plans, real estate holdings and retirement accounts from jobs your loved one may have held many years ago.
Assess your financial picture
A more long-term action to consider is how the inheritance will affect your personal finances. “You’re going to want to add your inheritance to your financial plan and see what the impact will be,” Brunner says. A large inheritance could make it possible to do things that were out of reach before or to approach your goals in a different way, so it’s important to reevaluate your plans for education, retirement and other objectives in light of what has changed. Your Financial Advisor can help you explore the possibilities and help you make any adjustments that are needed.
Since a large inheritance is also likely to change your tax picture, your Financial Advisor and tax specialist may be able to suggest ways to invest in a tax-efficient manner.
Give yourself time where you need it
Even as you take care of these immediate concerns, it’s just as important to give yourself the necessary time to think through larger issues. Say your inheritance includes a home. Keep in the family or sell? You should take immediate steps to ensure that the home is properly maintained and make sure you don’t miss property taxes or other deadlines. But you might give yourself a year or more to decide whether to sell, factoring in what your loved one desired and what the property means to you.
At an emotionally vulnerable time, a person who has inherited wealth may be inundated with requests from philanthropic organizations or from friends and relatives hoping for financial help. Given time and emotional distance, you and your advisors can devise a formal approach that reflects how you want to approach philanthropy and gifts.
Sometimes, you may need a year or so just to become comfortable with what it means to have the wealth, says Thayer Willis, author of the book Beyond Gold: True Wealth for Inheritors. Willis, a counselor and therapist who works with wealthy families, recalls a young woman who was “literally a starving artist, living hand to mouth.” When her father died, leaving her an inheritance, “her whole identity was challenged,” Willis says. She worried about everything from what to do with the money to how it would affect her relationships with her friends, most of whom were also starving artists.
Over time, her fears eased. She realized that the inheritance did not have to disrupt her artistic career. She used a portion as a down payment for a house—something she’d never owned—with space to continue her work. “She was able to get herself re-oriented and see this as a gift in her life and something that her father had done for her that she really valued,” Willis says.
You’re likely not a starving artist, but the key insight here—with time comes perspective—applies to almost everyone who, through sudden loss, may find new possibilities.