Receiving an inheritance can introduce new financial possibilities, but it can also leave you with more questions than answers.

Should you invest the money? Pay down debt? Keep or sell inherited property? Update your estate plan? Before making a significant decision, it helps to understand how the inheritance fits into your complete financial picture.

Download Wealth Due to Inheritance, a complimentary guide from Marcus Alexander, to explore the financial, investment, tax, insurance, and estate planning considerations that may follow an inheritance.

The guide helps you begin thinking through several important areas:

Evaluate your new financial position
Learn why reviewing your cash flow, calculating your net worth, and identifying the types of assets you inherited can be useful before making major financial decisions. 

Understand inherited trusts and assets
Explore some of the differences between receiving assets outright and receiving distributions through a trust, including the role of a trustee and the importance of understanding the trust’s terms.

Review cash, investments, and real estate
Consider some of the questions that can arise when you inherit a lump sum, a portfolio of investments, a home, land, or jointly owned property. 

Connect the inheritance to your goals
Think through how inherited wealth may affect debt repayment, education funding, retirement, charitable giving, family support, income needs, and other short- and long-term priorities.

Revisit investment and risk decisions
Review questions involving liquidity, diversification, investment risk, insurance coverage, and whether inherited assets still fit your broader financial strategy. 

Re-evaluate your estate plan
Learn why a significant change in wealth may prompt a review of your will, beneficiaries, insurance, trusts, gifting plans, and broader estate planning goals.

What should I do immediately after receiving an inheritance?
Start by identifying the assets you received and whether they were inherited outright or through a trust. Before making significant purchases, gifts, investment changes, or lifestyle decisions, consider reviewing your cash flow, net worth, access to the assets, and short- and long-term financial goals. 

Should I invest an inheritance right away?
Not necessarily. The appropriate decision depends on your cash flow, liquidity needs, objectives, risk tolerance, existing investments, and the type of assets inherited. The guide encourages recipients to consider these factors before formulating a new investment strategy. 

What if I inherited money through a trust?
Assets held in a trust are generally managed and distributed according to the trust’s terms. A trustee manages the trust for its beneficiaries, and the trust document may determine how and when income or principal is distributed. Reviewing the document with appropriate legal or financial professionals can help you understand the arrangement.

What happens if I inherit a house or other real estate?
You may need to decide whether to keep, occupy, rent, or sell the property. The decision may involve financial, tax, ownership, and personal considerations. Joint ownership can introduce additional requirements, so legal and tax guidance may be appropriate. 

Can an inheritance affect my taxes?
Inherited assets may introduce income, transfer, estate, or gifting considerations depending on the assets and the recipient’s circumstances. Because tax rules are highly situation-specific, recipients should consult an experienced tax professional or estate planning attorney. 

Should I update my estate plan after receiving an inheritance?
A meaningful change in wealth may be a reason to review your will, beneficiaries, insurance coverage, gifting plans, and any existing trusts. An estate planning attorney can help determine whether legal documents should be updated. 

Can a financial advisor help with an inheritance?
A financial advisor can help evaluate how inherited assets relate to cash flow, investments, retirement, risk, family goals, charitable intentions, and the rest of a financial plan. Tax and legal questions should also be coordinated with qualified tax and legal professionals.