What to Do With an Inheritance

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Updated · 1 min read
Profile photo of Virginia C. McGuire
Written by 
Profile photo of Arielle O'Shea
Co-written by 
Head of Content, Investing & Taxes

There are plenty of horror stories about sizable inheritances squandered on fast cars and glittering parties. But careful planning and good advice can help people use their good fortune in a way that creates lasting value.

Consider these steps to make sure you handle your inheritance wisely, and make the most out of a financial windfall.

1. Keep your inheritance to yourself (for now)

The first step financial advisors typically suggest, especially if you've come into a large sum of money: Keep quiet.

That might go against your instincts to squeal about your new-found wealth, or even share that wealth. But there's time for that later. Take it slow, and limit your circle for now to one or two trusted family members or friends, preferably ones who have no expectation of receiving a share of the money.

Advertisement
Trust & Will - Will

GoodTrust

LegalZoom - Last Will

Price (one-time)

Will: one-time fee of $199 per individual or $299 for couples. Trust: one-time fee of $499 per individual or $599 for couples.

Price (one-time)

$149 for estate plan bundle. Promotion: NerdWallet users can save up to $10.

Price (one-time)

Will: $99 for Basic, $249 for Premium with attorney assist. Trust: $399 for Basic, $549 for Premium with attorney assist.

Price (annual)

$19 annual membership fee.

Price (annual)

$39

Price (annual)

$199 per year for attorney assistance after the first year.

Access to attorney support

Yes

Access to attorney support

No

Access to attorney support

Yes

2. Take your time

Many people get anxious about letting a significant sum of money sit in a savings account, because they've been told that time is money due to compound interest. That's true. But in this case, taking a pause is better than rushing to make investment decisions and making mistakes as a result. The potential gains from quick moves can easily be outweighed by the risks of poor choices.

3. Work with a financial advisor to create a financial plan

Whenever you get a financial windfall, it's wise to consider whether this is the time to hire a financial advisor who can help guide you. It doesn't matter how big your inheritance is: You'll likely benefit from creating a long-range, holistic financial plan. A fee-only, fiduciary financial advisor can work with you to create a comprehensive roadmap for how to put this money to work.

The financial plan will also help you prioritize various goals that may now be within reach — retiring early, or fully funding college for your kids — and keep you from making rash decisions before you've thought things through. And many financial advisors can help you create a plan to give to charity strategically, including options like donor-advised funds.

4. Consider taxes on the inherited amount

There is no federal inheritance tax, and only a few states impose a tax on the recipient of an inheritance. There is, however, a federal estate tax, which is a tax on a deceased person's assets. The federal estate tax ranges from 18% to 40% and generally only applies to assets over $13.99 million in 2025 or $15 million in 2026. Some states also have their own estate taxes.

If you think these taxes might apply to you, a good financial advisor or tax advisor can confirm that, and help you navigate the tax laws to ensure you pay your fair share but no more.

5. Enjoy it

Depending on the size of an inheritance, it’s not a bad thing to have a little fun. Once you’ve made a financial plan and allocated the money accordingly, there’s something to be said for treating yourself.

For smaller inheritances, that might mean using 10% as fun money. If it’s a larger amount, you might set a specific figure to spend on things you've long been unable to afford — that nice vacation abroad or an upgraded car. The key, though, is to take this step last — after you've gotten quality advice, created a financial plan and considered taxes.

Compare online will makers

Advertisement
Company
NerdWallet
rating
Price
(one-time)
Price
(annual)
Access to
attorney support
Learn more
Ease of use
Trust & Will - Will
Trust & Will - Will
Get started

on Trust & Will's website

Will: one-time fee of $199 per individual or $299 for couples. Trust: one-time fee of $499 per individual or $599 for couples. $19 annual membership fee.Yes
Get started

on Trust & Will's website

Digital Assets
GoodTrust
GoodTrust
Get started

on GoodTrust's website

$149 for estate plan bundle. Promotion: NerdWallet users can save up to $10.$39No
Get started

on GoodTrust's website

State-specific legal advice
LegalZoom - Last Will
LegalZoom - Last Will
Get started

on LegalZoom's website

Will: $99 for Basic, $249 for Premium with attorney assist. Trust: $399 for Basic, $549 for Premium with attorney assist.$199 per year for attorney assistance after the first year.Yes
Get started

on LegalZoom's website

Comprehensive services
Nolo’s Quicken WillMaker - WillMaker
Nolo’s Quicken WillMaker - WillMaker
Get started

on Nolo's website

$109 to $219$39 per year to make changes after the first yearNo
Get started

on Nolo's website

Nerdwallet advisors logo

Get matched to a financial advisor for free with NerdWallet Advisors Match.

Illustration
Advertisement