When you receive a windfall inheritance, every instinct urges immediate action. Financial advisors call offering assistance. Family members share opinions about what you should do. Your own mind races with possibilities for how the money could change your life. Despite these pressures, the smartest move is doing nothing with the money itself for at least ninety days while taking specific preparatory actions that position you for success. This disciplined waiting period prevents costly mistakes while building the foundation for wise wealth management.
The Psychological Reset Period
Inheritances typically arrive during grief when your judgment is compromised by loss, stress, and emotional turmoil. The first ninety days after receiving an inheritance should focus primarily on emotional processing rather than financial decisions. Grief affects cognitive function in measurable ways, impairing your ability to evaluate risks, consider long-term consequences, and resist impulsive choices.
During this period, resist any pressure to make major financial decisions. Place inherited funds in safe, liquid accounts like money market funds or high-yield savings accounts. These vehicles protect the money from market volatility while keeping it accessible if genuine emergencies arise. The modest interest earned matters far less than avoiding major mistakes driven by impaired judgment.
Use this time to process grief through appropriate channels. Consider working with a therapist who specializes in grief counseling. Join support groups for people dealing with loss. Talk with trusted friends and family about your feelings. The goal is separating emotional processing from financial decision-making so that when you do act, you're operating from clarity rather than crisis.
Recognize that you'll likely experience complicated emotions about the inheritance itself. Guilt about benefiting from someone's death, pressure to honor the deceased through your choices, anxiety about managing significant wealth, and fear of making mistakes all commonly arise. Acknowledging these feelings and working through them before making financial decisions prevents emotionally-driven choices you'll regret.
Building Your Knowledge Base
The ninety-day waiting period provides crucial time to educate yourself about wealth management, even if you never become an expert. Basic financial literacy dramatically improves your ability to evaluate advisor recommendations, avoid predatory schemes, and make informed choices aligned with your goals.
Start with foundational concepts like asset allocation, diversification, tax efficiency, and risk management. Numerous books, podcasts, and online resources explain these concepts in accessible language. You don't need to become a financial expert, but understanding fundamentals helps you ask good questions and recognize bad advice.
Learn specifically about issues relevant to inheritances. Inherited retirement accounts have different distribution rules than accounts you establish yourself. Estate taxes may apply depending on inheritance size and your relationship to the deceased. Basis step-up rules affect capital gains taxes on inherited assets. Understanding these specific considerations helps you avoid costly mistakes unique to inheritances.
Educate yourself about common inheritance mistakes and scams targeting inheritance recipients. Understanding how predators operate protects you from manipulation. Recognizing common mistakes like immediately lifestyle inflation or poor investment choices helps you avoid repeating them.
Join online communities of people managing inherited wealth. Hearing others' experiences, challenges, and solutions provides practical insights that generic financial advice cannot match. These communities also normalize the complicated feelings accompanying sudden wealth, helping you recognize you're not alone in finding inheritance both blessing and burden.
Assembling Your Advisory Team
The ninety-day period should focus heavily on identifying and vetting financial professionals who will guide your wealth management. Rushing this process and hiring the first advisor who contacts you often leads to poor outcomes. Taking time to interview multiple candidates and check credentials substantially improves your chances of finding advisors who truly serve your interests.
Start by understanding different advisor types and compensation structures. Fee-only advisors charge for advice without earning commissions on products, aligning their interests with yours. Commission-based advisors earn money by selling you financial products, creating potential conflicts of interest. Fee-based advisors combine both approaches. Understanding these distinctions helps you evaluate whether advisor recommendations serve you or their own financial interests.
Interview at least three financial advisors before making hiring decisions. Ask about their experience with inheritance situations specifically, since this differs from general wealth management. Inquire about their investment philosophy, how they're compensated, what services they provide, and how often you'll communicate. Request references from current clients with similar situations to yours.
Verify credentials and check disciplinary history through regulatory databases. Financial advisor credentials like CFP or CFA indicate specific training and adherence to professional standards. Checking disciplinary records reveals past problems that might predict future issues.
Beyond financial advisors, consider whether you need specialized professionals for specific inherited assets. Real estate requires property managers or real estate professionals. Business interests need business advisors or accountants. Inherited retirement accounts benefit from tax professional guidance. Identify all asset types in your inheritance and determine what expertise each requires.
Consider hiring an estate planning attorney to update your own estate plans reflecting your new financial situation. Documents appropriate for modest estates become inadequate when wealth increases substantially. Updating beneficiary designations, creating or revising trusts, and ensuring proper asset titling all require professional guidance.
Conducting a Comprehensive Financial Inventory
Before deploying inherited funds, conduct a thorough inventory of your complete financial situation including assets, liabilities, income, expenses, and goals. This comprehensive picture reveals how the inheritance fits into your broader financial life and what purposes it can most effectively serve.
Document all assets including bank accounts, retirement accounts, investment accounts, real estate, business interests, vehicles, and personal property with significant value. Note current values, cost basis where relevant, and any encumbrances like mortgages or loans. This inventory establishes your baseline before inheritance integration.
List all liabilities including mortgages, car loans, student loans, credit card debt, and any other obligations. Note interest rates, payment schedules, and any prepayment penalties. Understanding your debt situation helps evaluate whether paying off obligations should be an early inheritance priority.
Track monthly income from all sources and categorize monthly expenses in detail. Many people lack clear understanding of their actual spending patterns. Detailed expense tracking during the waiting period reveals spending reality that should inform inheritance deployment decisions. You might discover you're spending more than you realized on categories you don't value, suggesting areas where inheritance could improve life quality more effectively than others.
Project major future expenses like college funding for children, home purchases or improvements, vehicle replacements, and retirement needs. Quantifying these goals helps evaluate whether your inheritance sufficiently funds them or whether you need to prioritize among competing objectives.
Setting Clear Goals and Priorities
The ninety-day period should culminate in articulating clear goals for what you want the inheritance to accomplish. Without explicit goals, inherited money tends to disappear through incremental spending that serves no coherent purpose, leaving you wondering where it went without anything meaningful to show for it.
Start by distinguishing needs from wants. Needs include emergency funds, debt elimination, retirement security, and other fundamentals determining financial stability. Wants include lifestyle improvements, experiences, and purchases that enhance life quality but aren't essential. Meeting needs before funding wants ensures the inheritance provides lasting security rather than temporary pleasure.
Consider both immediate and long-term goals. You might have urgent needs like establishing emergency funds or paying off high-interest debt. Long-term goals like retirement security or funding children's education require different strategies emphasizing growth over accessibility. Clarifying these different time horizons helps structure inheritance deployment appropriately.
Reflect on what would honor the person you inherited from. While you shouldn't feel obligated to use inheritance exactly as the deceased would have wanted, many people find satisfaction in allocating some portion to purposes that reflect the deceased's values. This might mean charitable giving to causes they supported, funding education they valued, or building security they would have wanted for you.
Involve family members appropriately in goal-setting conversations. If you're married, alignment between spouses about inheritance goals prevents conflict. If you have children, considering how the inheritance might benefit them through education funding or eventual passing wealth to the next generation could influence current choices.
Creating Your Action Timeline
The final component of your ninety-day plan involves creating a specific timeline for acting on inheritance-related decisions after the waiting period concludes. This timeline should sequence actions logically based on priority and interdependence.
Prioritize actions addressing immediate risks or needs. Funding emergency reserves, paying off high-interest debt, or obtaining necessary insurance should happen first. These actions provide security that makes subsequent choices less pressured.
Schedule actions requiring professional coordination. Meeting with financial advisors to implement investment strategies, working with estate planning attorneys to update documents, or consulting tax professionals about tax-minimization strategies all need scheduling with adequate time for thorough work.
Build in additional waiting periods for major irreversible decisions like large purchases or gifting substantial amounts to family members. Even after the initial ninety days, maintaining some caution prevents impulsive choices. Consider imposing escalating waiting periods: thirty days for five-figure decisions, ninety days for six-figure decisions, and six months for seven-figure commitments.
Plan for ongoing review and adjustment. Your initial inheritance deployment plan shouldn't be carved in stone. Schedule quarterly reviews during the first year to assess whether your strategy is working as intended and whether adjustments are needed based on changing circumstances or new information.
What Not to Do During the Ninety Days
Understanding what to avoid during the waiting period is as important as knowing what actions to take. These prohibitions protect you from common mistakes that derail wealth management before it properly begins.
Don't make any large purchases or lifestyle changes. The new car, bigger house, or luxury vacation can wait. These purchases made in the excitement of sudden wealth often don't align with your actual values and goals when evaluated with clearer judgment later.
Don't tell everyone about your inheritance. Financial privacy protects you from solicitations, relationship complications, and potential security risks. Share inheritance information only with immediate family and professional advisors who need to know.
Don't respond to unsolicited advisor contact. Financial professionals who cold-call or email inheritance recipients often don't have your best interests in mind. Instead, proactively seek advisors through research and referrals from trusted sources.
Don't lend or give money to anyone during the waiting period. Requests from family or friends for loans or gifts should wait until you've completed your planning process and explicitly decided what portion of inheritance, if any, you'll share with others.
Don't invest in anything you don't understand. Complex investments, private deals, or opportunities requiring quick decisions should be declined during the waiting period regardless of how attractive they sound.
Don't quit your job or make major career changes. The inheritance might eventually enable career transitions, but such decisions require careful planning rather than impulsive action based on sudden wealth feelings.
The Discipline That Protects Wealth
The discipline to wait ninety days before touching inherited funds is the same discipline required to preserve and grow wealth over time. If you can resist immediate gratification for three months, you demonstrate the temperament necessary for successful long-term wealth management. This waiting period isn't lost time but rather the foundation that determines whether your windfall inheritance becomes lasting financial security or a temporary windfall quickly dissipated. The moves you make before spending a single dollar matter far more than any specific investment or purchase you'll eventually make.
Top comments (0)