When my father passed away in 2013, my sister and I learned that we were the joint beneficiaries of his life insurance policy. We knew that Dad intended this money as a strings-free gift. His final arrangements were already paid for, and my sister and I were both thirtysomething adults who did not rely on his income. And yet, I have never felt more financial stress in my life than when dealing with our inheritance, which consisted of the proceeds of our dad’s life insurance.

Despite knowing Dad would want me to go on a vacation or purchase a car with his gift, the idea of enjoying this money felt like a betrayal. Allowing the money to make me happy would signify that I was glad Dad had died.

Which is how I was introduced to the sometimes crazy-making experience of receiving an inheritance. Considering the $72 trillion in assets expected to pass from baby boomers to their children and grandchildren in the next 20 years, millions of Americans need to better understand how to handle inherited money. 

Here’s what you need to know.

Grief is irrational (and sometimes ugly)

Even the most tight-knit family can devolve into nasty fighting when someone dies. If there is also money (or heirlooms) at stake, the conflict can potentially fracture relationships long term.

It’s helpful to think of grief as a desiccant—it wrings all the water out of mourners, leaving them the most concentrated version of themselves. So your argumentative uncle will contest everything anyone says, your status-obsessed sister-in-law will be pushing for the luxe casket despite the deceased’s wishes, and your ne’er-do-well cousin will get high in front of his pearl-clutching grandmother.

In other words, expect to see your family’s least attractive traits magnified by their grief.

Keeping this fact in mind can help you navigate the difficult process of inheritance. You can prepare yourself for the most concentrated version of your family and take their reactions less personally. If at least one heir maintains their calm, they can stay above the fray and work to ensure the inheritance is distributed according to the estate plan.

Time is on your side

When you receive money as a result of someone’s death, you’re bound to have complex feelings about the cash. In my case, I felt duty bound to spend the money on things my financial-planner father would approve of—like giving to charity, putting money into my kids’ 529 accounts, and contributing to my retirement accounts. It was very important to me that I not have any fun with the money.

This is a common response to inherited wealth, but it is not the only one. Other heirs may feel like they have to lavishly spend the money on themselves because it’s what their loved one would have wanted. And still others may feel internal pressure to find the perfect way to use the money.

What all these reactions have in common is that heirs feel like they need to act quickly. Receiving any windfall can feel like a kind of emergency because you could make the “wrong” financial decision and ruin your good fortune. Add in the element of grief, and that sense of urgency is turned up by your emotions.

This is why anyone who has received an inheritance should find a safe place to park it for a few months before making any big decisions. Allowing the worst of your grief to dissipate before you start making major purchases, gifts, or investments will allow you to make choices that fit your financial needs and goals, rather than soothe your emotional response.

Experts can help

Inheriting money can have a number of potential implications on your financial situation, from your tax burden to your investment choices to your housing. These kinds of issues can be too much for the average person to handle under normal circumstances, let alone while missing a loved one.

This is why heirs should talk to financial advisors before making big decisions about their inheritance. Even if you have never worked with an accountant or a Certified Financial Planner (CFP) before, now is the time to find an expert who can help you navigate the financial complexities.

An advisor can help you make the right moves to avoid unnecessary taxes or government penalties, determine the best investments for your goals, and figure out any hidden costs of major purchases.

To find an advisor you can trust, treat the process like a job interview—where you’re the prospective employer. Ask about the advisor’s background, certifications, areas of expertise, and compensation, and don’t accept condescension, unexplained jargon, or reassurances with no substance.

Making the most of your inheritance

Inheriting money is an emotional and unsettling experience, even if the money itself is a blessing and a gift. Recognizing how grief may affect other heirs in your family, taking your time before making decisions about your windfall, and consulting trusted experts to help navigate the potential implications of your inheritance, can all help you make the best decisions with the money.

Not to mention, following these steps can also save you a great deal of heartache and anxiety. Ask me how I know.

---