Everything You Need to Know About Handling an Unexpected Inheritance

Joshua Dunlop |

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When life hands you an unexpected inheritance, it feels like a mix between winning the lottery and walking into a fog. Suddenly, there's a chance for financial comfort, but also, a weight of uncertainty. What do you do first? Do you pay debts, invest, or save? Quick tips:

  • Take a breath: Don’t rush decisions.
  • Get advice: Talk to a financial advisor.
  • Know taxes: Understand any tax implications.
  • Plan: Think about long-term goals and how this money can help reach them.

Infographic showing steps after receiving an unexpected inheritance: 1. Pause and process emotions. 2. Seek professional financial advice. 3. Understand tax impacts of the inheritance. 4. Create a long-term financial plan. - unexpected inheritance infographic pillar-4-steps

Image Alt Text: Infographic showing steps after receiving an unexpected inheritance: 1. Pause and process emotions. 2. Seek professional financial advice. 3. Understand tax impacts of the inheritance. 4. Create a long-term financial plan. - unexpected inheritance infographic pillar-4-steps

Sudden Wealth Syndrome sounds like a good problem to have, yet it can be psychologically and emotionally taxing. Imagine going from your usual financial struggles to dealing with a significant windfall overnight. This transition can be overwhelming, producing a mix of joy, guilt, and anxiety.

People often fantasize about acquiring a large sum of money, yet the reality can stir a storm of decisions and emotions. This introduction will help guide you through the initial shock and towards making sound, well-informed choices with your unexpected boon. Whether you're reeling from the loss of a loved one or navigating the complexities of a windfall gain, you're not alone.

Understanding Unexpected Inheritance

When life throws you a surprise in the form of an unexpected inheritance, it's like finding yourself in the middle of a story you hadn't read the beginning of. Suddenly, you're holding a piece of the puzzle that can change the picture of your financial future. But before we dive into what to do with this new asset, let's break down what we're really talking about.

Inheritance Meaning: Simply put, an inheritance is wealth or assets passed down from one person to another after the former's passing. It can include money, properties, investments, family heirlooms, or even businesses.

Inheritance Examples: Imagine your distant aunt leaving you her old house in the countryside, or a parent passing on a significant amount of money saved over a lifetime. These are both examples of inheritances that can significantly alter your life's trajectory.

But not all inheritances come with a forewarning.

Sudden vs. Expected: Most people imagine inheritances as something anticipated, especially in the context of close family members. However, a sudden inheritance can come from a relative you barely knew or a family friend who held you in high regard, catching you completely off-guard.

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Understanding the nature of your inheritance is the first step in managing it wisely. Whether expected or sudden, the key is not to rush. Inheritances, especially unexpected ones, can evoke a whirlwind of emotions — from excitement and joy to guilt and overwhelm. Recognizing these feelings as a natural part of the process is crucial.

Consider the story of Seth, mentioned in our research, who used his skills and empathy gained from teaching kickboxing to guide someone through the complexities of managing an unexpected inheritance. His approach of acknowledging the emotional weight before diving into the financial aspects is a valuable lesson in handling such a situation with care and understanding.

In the next sections, we'll explore the initial steps to take after receiving an unexpected inheritance, how to plan financially for the future, and the legal considerations to keep in mind. An inheritance is not just a windfall gain; it's a responsibility and an opportunity to honor the legacy of the person who chose to pass it on to you.

Initial Steps After Receiving an Unexpected Inheritance

Receiving an unexpected inheritance can feel like a rollercoaster of emotions. You might feel lucky, overwhelmed, and unsure all at once. Here's how to navigate these first crucial steps.

Don't Assume

First things first, don't assume you know exactly what comes with the inheritance. Assets might include more than just money—think real estate, stocks, or even a family business. Each of these comes with its own set of considerations and responsibilities.

Take It Slowly

When the news hits, your mind might race with all the possibilities. Here's a piece of advice: take it slowly. There's no need to rush decisions. As noted in the research, sudden wealth can lead to hasty decisions that might not align with your long-term goals. Give yourself time to adjust and think things through.

Seek Advice

This step is crucial. Reach out for professional advice. Financial advisors, especially those experienced with inheritances, can be invaluable. They can help you assess your new financial situation, understand the complexities of your inheritance, and plan accordingly. Not all advice is created equal. Look for advisors who understand your goals and can provide guidance tailored to your needs.

Understand Tax Implications

Inheritances can be tricky when it comes to taxes. Depending on what you inherit, there could be significant tax implications. For example, inheriting a retirement account like an IRA or a 401(k) comes with different rules than inheriting cash or real estate. The concept of a "step up in basis" can minimize capital gains taxes on inherited assets, but the specifics depend on your situation. Understanding these nuances is essential to avoid unexpected tax bills and to make the most of your inheritance.

By following these initial steps—don't assume, take it slowly, seek advice, and understand tax implications—you'll be in a much better position to manage your unexpected inheritance wisely. This is about honoring the legacy of the person who passed it on to you and making informed decisions that benefit your future.

In the next section, we'll dive deeper into how to plan financially with your unexpected inheritance in mind. From paying off debts to investing wisely, we'll cover the strategies that can help secure your financial future.

Financial Planning with an Unexpected Inheritance

When you receive an unexpected inheritance, it might feel like a windfall. But to truly honor the legacy of the person who left it to you, smart financial planning is key. Here's how to approach it:

Pay Off Debts

First things first. Look at any debts you have—credit cards, student loans, mortgages—and consider paying these off. Why? Because debt often comes with high interest. By paying it off, you're essentially earning that interest by not having to pay it anymore. It's a guaranteed return on your investment.

Build Emergency Fund

Next up, build or beef up your emergency fund. Life is full of surprises, and not all of them are as pleasant as an unexpected inheritance. Aim for three to six months’ worth of living expenses. This fund acts like a financial safety net, catching you in times of sudden job loss or unexpected medical bills. Keeping this fund in a high-yield savings account keeps it accessible and earning some interest.

Invest Wisely

Investing can grow your inheritance over time. Diversify your investments across different asset classes like stocks, bonds, and real estate. Diversification helps manage risk. The goal is to grow your wealth steadily over time, not to chase the next big thing.

Ethical Investments

More and more people want their money to do good in the world. Ethical investments focus on companies that prioritize environmental sustainability, social responsibility, and good governance (ESG). Studies show that ESG investments can perform as well as, if not better than, traditional investments. So, you can support what you believe in while still working toward your financial goals.

Morgan Stanley Impact Quotient

If ethical investing interests you, tools like Morgan Stanley's Impact Quotient can help. It aligns your portfolio with your personal values by first identifying what matters most to you, then assessing how your current investments match up, and finally suggesting changes to better align your portfolio with your values.

In Summary:

Financial planning with an unexpected inheritance doesn't have to be overwhelming. By paying off debts, building an emergency fund, investing wisely, and considering ethical investments, you can secure your financial future and make a positive impact in the world. It's not just about growing your wealth—it's about using it in ways that reflect your values and goals.

In the next section, we'll explore the legal considerations and estate planning necessary to protect this inheritance and ensure it benefits future generations.

Legal Considerations and Estate Planning

When you receive an unexpected inheritance, it's like suddenly holding a piece of the future in your hands. But to make sure this gift benefits you and your loved ones in the long run, you need to think about legal stuff. Yes, it might sound boring compared to dreaming about what you'll do with the money, but it's super important. Let's break it down into simpler parts: Trusts, Wills, End of Life Planning, and Protecting Assets for Future Generations.


Think of a trust as a safety box where you can keep your inheritance. But it's not just any box. It's a special one that you can set rules for. For example, you can decide who gets to open the box and when. This is really handy if you want to make sure the money helps your kids or grandkids at the right time in their lives.

It's like what Seth mentioned to Louisa about using a trust to direct assets for her child's benefit, no matter their age. Trusts can ensure that the inheritance stays within the family and is used the way you want, even after you're gone.


A will is your voice after you're not here to speak. It tells everyone what you want to happen with your things, including any money or property you've inherited. Without a will, the state decides who gets what, and it might not be what you would have wanted.

Creating a will is a way to make sure your wishes are known and followed. It's like leaving a map for your loved ones, so they don't have to guess what you would have wanted.

End of Life Planning

No one likes to think about the end, but a little planning now can make things so much easier for your family later. End of life planning includes making a will, but it's also about deciding on things like power of attorney and healthcare wishes.

It's about making sure that if you can't speak for yourself, there's a plan in place that reflects what you want. This planning can give you and your loved ones peace of mind, knowing that everything is taken care of.

Protecting Assets for Future Generations

Your unexpected inheritance isn't just for you; it's a chance to provide for your family's future. By setting up trusts, creating a will, and doing end of life planning, you're taking steps to protect these assets.

It's about making sure that the money does good things for you, your kids, and even your grandkids. Like Seth suggested to Louisa, using a trust can ensure that the inheritance stays with your intended beneficiaries, like your children, and not with someone else down the line.

Taking care of these legal considerations might seem like a lot of work, but it's all about protecting your inheritance and making sure it helps you and your family in the best way possible. It's not just about the money; it's about your legacy and the future you want to build for your loved ones. In the next section, we'll dive into the emotional and psychological aspects of receiving an unexpected inheritance and how to navigate those waters.

Emotional and Psychological Aspects

When you get an unexpected inheritance, it's not just your bank account that changes. Your feelings and family relationships might change too. Let's talk about what you might feel and how to handle it.

Sudden Wealth Syndrome

Imagine feeling stressed, not because you're broke, but because you suddenly have more money than you know what to do with. This is called Sudden Wealth Syndrome. It's real and can make you feel really anxious, guilty, or even scared. You might worry about losing your money or how it will change your life.

Coping Strategies

Here's how to deal with these feelings:

  • Take your time: Don't rush into big decisions. Give yourself a moment to breathe.
  • Set goals: Think about what you really want from life. This can help you make good choices with your new wealth.
  • Stay grounded: Remember who you are and what's important to you. Money doesn't have to change your values.

Family Dynamics

Money can complicate relationships. Your family might expect you to share your windfall, or they might treat you differently. Here's how to handle it:

  • Communicate: Talk openly about your feelings and plans. It's okay to set boundaries.
  • Be fair: If you decide to share, think about what's fair and why you're doing it. It's your choice.
  • Seek harmony: Try to keep family relationships positive. Money isn't worth hurting the people you love.

Seeking Professional Help

If you're feeling overwhelmed, it's okay to ask for help. A therapist can help you sort through your feelings. A financial advisor can help you make smart money decisions. They can work together to help you feel more secure and confident about your future.

An unexpected inheritance can change your life, but it doesn't have to control it. With the right approach, you can manage the emotional and psychological challenges that come with sudden wealth. In the next section, we'll hear real stories from people who've been through it. They'll share what they learned and how they found support.

Real Stories of Unexpected Inheritances

When we talk about unexpected inheritance, it's easy to get lost in the numbers and forget about the human stories behind them. Let's dive into some real-life tales that shed light on the impact of sudden wealth and the importance of community support.

Jamie's Story: Jamie inherited a significant sum from an aunt she barely knew. Initially overwhelmed, she found solace and direction in a support group for individuals who had experienced similar windfalls. Jamie learned the importance of taking things slowly and seeking professional advice, a lesson she now shares with others in her situation.

Seth's Insight: Seth, a financial advisor, recalls working with Louisa, who inherited a mix of cash, investments, and property. Together, they navigated ethical investment options and the complexities of managing a property from afar. Seth's guidance helped Louisa make informed decisions that aligned with her values and financial goals.

Community Support: The stories of Jamie and Louisa highlight not just the financial, but also the emotional journey of dealing with an unexpected inheritance. Both found strength and clarity through community—be it a support group or a trusted advisor. This sense of belonging and shared experience proved invaluable.

Learning from Others

  • Embrace Patience: Rushing into decisions can lead to regret. Take the time to process your emotions and understand your options.
  • Seek Professional Help: A financial advisor can provide tailored advice that considers your unique situation, helping you navigate tax implications and investment strategies.
  • Find Your Community: Whether it's a support group or online forums, connecting with others who've been through similar experiences can offer comfort and practical advice.

Unexpected inheritances come with their own set of challenges and opportunities. The stories of those who've walked this path before us remind us that we're not alone. They underscore the importance of patience, professional guidance, and the strength found in community support. Let's keep these lessons in mind, knowing that with the right approach, we can navigate the complexities of sudden wealth and make the most of our unexpected inheritance.


Handling an unexpected inheritance is much more than just dealing with the numbers in your bank account. It’s about understanding the broader picture and making decisions that align with your life goals and values. At NewMaker Financial, we believe in a holistic vision planning approach. This means we look at your entire financial picture, including your unexpected inheritance, to help you make informed decisions that benefit you today and in the future.

Education is at the heart of what we do. We know that finance can seem complicated, but we're here to break it down for you in simple terms. Whether it's understanding the tax implications of your inheritance or figuring out the best way to invest your money, we provide you with the knowledge you need to feel confident about your decisions.

Our partnership with you is based on trust and communication. We're not just here to give advice; we're here to listen, understand your unique situation, and work together to create a plan that fits your life. It's about building a relationship where you feel valued, understood, and supported every step of the way.

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An unexpected inheritance can be a turning point in your life. It offers a unique opportunity to secure your financial future and achieve your dreams. But it also comes with its own set of challenges. That's why it's important to have a partner like NewMaker Financial by your side. With our holistic vision planning, commitment to education, and strong partnership, we can help you navigate the complexities of managing your inheritance.

If you're ready to make the most of your unexpected inheritance and plan for a bright future, we're here to help. Learn more about our estate planning services and how we can assist you in turning your inheritance into a lasting legacy.

Together, we can ensure that your unexpected inheritance is not just a momentary windfall, but a foundation for lasting financial security and fulfillment.