You’re Receiving Inherited Money – Now What?

August 8, 2025 | By Nichole Coyle
You've inherited money, now what? Image of an adult child and their elderly parent.

By Nichole Coyle, CFP®

So you’ve inherited money – what to do next? Receiving an inheritance can stir up a mix of emotions. Whether it’s expected or comes as a surprise, it’s common to feel overwhelmed by the possibilities, responsibilities, and even guilt. What should you do with the money? Should you pay off debt, invest, or finally buy that dream vacation home?

As a financial planner, I’ve walked many people who inherited money through this experience and want to share some practical tips. This guide can help you to pause, think more clearly, and make choices that serve both your present and future.

 

Step 1: Don’t Rush

Before making any major decisions, take a breath. Inheritances tend to come during emotional times, like after the loss of a loved one. It’s often okay to let the money sit in the same type of investment that it came from or even in a money market fund or high-yield savings account while you process and plan.

There’s usually not a need to make immediate financial moves. Give yourself 3–6 months before making big decisions unless something is urgent (like an expiring option or tax filing requirement).

 

Step 2: Understand What You’ve Inherited

Not all inheritances are straightforward. You might receive:

  • Cash or a check
  • Investment accounts
  • Retirement accounts (like IRAs or 401(k)s)
  • Property or real estate
  • Life insurance proceeds
  • Business interests or personal items of value

Each of these comes with different tax implications, transfer processes, and decisions. For example, inheriting an IRA is very different from inheriting a checking account. It’s wise to meet with a financial planner or tax advisor to avoid surprises.

 

Step 3: Clarify Your Goals

Once you know what you’re working with, think about how this inheritance can support your financial goals. Common goals include:

  • Paying off debt
  • Building an emergency fund
  • Saving for a home
  • Funding education (for you or your kids)
  • Investing for retirement
  • Giving to charity
  • Creating a legacy of your own

There’s no one right way to spend or invest inherited money, but it’s helpful to tie your choices to something meaningful.

 

Step 4: Consider Taxes

Some inherited assets are tax-free (like life insurance proceeds), while others could have major tax consequences. For example:

  • Inherited IRAs may require minimum withdrawals and have income tax implications.
  • Selling inherited property can trigger capital gains taxes, depending on how the value has changed.

Good planning can help reduce or defer taxes, so consulting a tax professional is often worth it.

 

Step 5: Balance Present Enjoyment with Long-Term Benefits

It’s perfectly okay to use part of your inherited money for something fun or meaningful like a vacation, a new car, or home improvements. But consider how much of it could also build long-term stability and wealth.

Think of it like this: How can I use this gift in a way that honors my loved one and supports my future?

 

Step 6: Build or Update Your Own Financial Plan

An inheritance is a great opportunity to revisit (or create) a financial plan. With more resources at your disposal, you can refine your goals, protect what you now have, and ensure you’re on track for what matters most to you.

And don’t forget, this is also a great time to think about your own estate planning. Now that you know what it’s like to be on the receiving end, consider what kind of legacy you want to leave.

 

Final Thoughts

An inheritance can be a powerful financial turning point. Used wisely, it can reduce stress, accelerate your goals, and even create opportunities you didn’t think were possible.

If you’re unsure where to start, don’t hesitate to get help. Working with a financial planner can bring clarity and confidence as you make the most of this new chapter. Have questions about your own inheritance? Please feel free to reach out, I’m here to help you make thoughtful, informed decisions that support your future.

 

Nichole Coyle, CFP®, CSLP®

Managing Partner, Financial Planner

2300 St. Clair Ave NE

Cleveland, OH 44114

216.621.4644 x1607 office

330.607.2213 cell

nichole@impactcfp.com

 

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a Broker-Dealer, and a Registered Investment Advisor.

Cetera is not affiliated with the financial institution where investment services are offered or any other named entity.

Investments are: Not FDIC/NCUSIF insured * May lose value * Not financial institution guaranteed * Not a deposit * Not insured by a federal government agency.

 

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.

 

Posted In: Guest Blog, Saving