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.
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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.
⏱️What to do in the first 48 hours
Tap to see a checklist of important things to do immediately if you suddenly and unexpectedly receive $100,000 or more.
If a windfall comes your way, there are a few things to do immediately, says Ryan Sterling, a financial advisor and the CEO of NerdWallet Wealth Partners.
- Hire an accountant, a lawyer and a financial advisor. “Assemble a team or ‘board of directors’ to help guide you to make sure your assets are protected, you're paying the appropriate taxes and everything is buttoned up from a legal standpoint,” he says. (Here's how to find a financial advisor and how to find a CPA.)
- Take steps to protect your (and your family’s) privacy. Don't pick up or respond to any unknown calls, emails or text messages. Public notices about the windfall or even just rumors that you’ve come into some money may attract attention from a variety of people who want your money.
- Decide how you’ll claim the money. If the money is from a lottery or drawing, there will likely be some sort of claim form and you’ll need to provide identification, a Social Security card, or other items. Talk with your team about whether to claim the money in your own name or through some sort of legal entity, such as a trust or an LLC.
- Decide where to deposit the funds. Make sure to keep no more than $250,000 in the same bank, as anything over that generally is not federally insured, Sterling says. You may want to consider utilizing a number of different banks and brokerage firms to ensure you stay under the FDIC coverage limits (which apply to banks) and the SIPC coverage limits (which apply to brokerage firms). There are also accounts that do this for you by sweeping your funds into a number of different banks to increase your coverage. You then access the money through a single account.
- Don't buy anything. To avoid making impulsive, excitement-fueled purchases that you’ll regret, don’t make any purchases or promises to people until the money becomes boring, Sterling says. “Commit to doing nothing for the first month or so and let the excitement die down.”
- Don't make loans to friends or family. Or at least don't expect to see that money again if you do. “Give it away or don't give it away. You likely won't get paid back, which could put serious pressure on a friend or family member,” Sterling says.
- Set rules and boundaries. It’s fine to help people, but in the first 48 hours, define who gets help and why, and keep the circle as tight as possible. Your team can help field the inevitable financial requests. “We're happy to play bad cop when family members and friends come for money,” Sterling says.
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.
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AD Advertisement 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.
