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7 Rules for Responsibly Handling an Inheritance

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Unexpected windfalls can be a welcome surprise, particularly when times are tough. But when the money is the result of an inheritance after a loved one's death, it can also be a huge burden.

Conventional wisdom states that you shouldn't make any big, life-altering decisions within 6 to 12 months of a serious loss, but that invites a host of questions: What do I do with the money in the meantime? What about decisions I have to make quickly? How can I assure they're sound? How do I know if I'm ready to tackle a big decision?

Here's some advice to consider if you find yourself in such a situation.

  • Allowing 6 to 12 months before making major decisions is a guideline, not a universal prescription. Some folks are harder hit by a loss or have other circumstances that complicate the mourning process. Those folks may need to proceed even more cautiously before making life-altering decisions.
  • Get support during your grieving process. Difficulty coping with loss is a normal human reaction, not a sign of weakness. Grief support groups, trained professionals, and even online community resources can be effective in helping you work through this tough time. Consider contacting area churches, hospices, or hospitals to find grief programs in your area.
  • Consult a financial expert; this is one of those times when going it on your own may not be in your best interest. Fee-only planners can help you develop sound strategies for handling your newfound assets, and you won't have to worry about their commissions taking a bite out of your inheritance. Visit the National Association of Personal Financial Advisors or GarrettPlanningNetwork.com to see if a fee-only advisor is available in your area.
  • Be willing to accept help from trusted friends and family members. One sign that you may be making a bad financial decision is if you're afraid to ask a trusted family member or friend for feedback about an idea you have for the money. That's your intuition telling you that your decision may not stand up to reasonable scrutiny.
  • Make rules about how long to consider a big decision before taking any action. You might also want to put a cap on how much you can spend in the aftermath of a loss. Splurging on a new sports car may make you feel better for a little while, but it can get very expensive trying to outrun grief.
  • Avoid major moves for at least a year. Sometimes in the immediate aftermath of a loss, folks think they simply can't live with the constant reminders of their loved one and make hasty decisions to relocate. The truth is, while the reminders are tough, grief will follow you wherever you go, even out of state and into a "new" life. Better to take some time to work through the intensity of the loss before making such a big lifestyle change.
  • Honor the conventional wisdom that suggests you shouldn't mix business with friendship. In the best of times, money issues can complicate or even ruin a perfectly good relationship; during the time after a loss, it can get that much uglier.

A version of this article ran in February 2007. It has been updated.

Fool contributor Elizabeth Brokamp is a licensed professional counselor who talks money with her honey, Robert Brokamp, editor of The Motley Fool's Rule Your Retirement newsletter service. The Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (0)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 29, 2008, at 3:04 PM, belicoso wrote:

    With the greed that is rampant among contemporary inheritance cases, it is a small miracle to walk away with an substantial inheritance without first having to beat out some shameless relative who makes a bogus claim to a larger portion of estate than they are entitled to. Once you have dealt with the Anna Nicole Smith of your family you've already lost a portion (if not all) of your inheritance in legal fees. If there is any left, keeping that money as a nestegg is clearly the best strategy. Too many people fall for some swindlers claim that he can show them returns of outrageous proportions, there are no easy answers, stick to a believable and conservative investment strategy if you mean for your inheritance to be part of your long term life plan. If you're thinking that you want to try and double or triple your money in a short time, you might as well just go out and buy a car or just go nuts with the money because at least then you'll enjoy it. If you expect too much of your money then you will lose it quickly and you won't even have a shiny new car to show for it.

  • Report this Comment On December 31, 2008, at 5:49 PM, Lintermans wrote:

    Time and support and such important elements in handling an inheritance intelligently.

    Support, especially, group support, is as important during the grieving process as is allowing, if possible, 6 to 12 months before making major decisions. Yet, the bereaved often feel unable to cope with a grief support group (mistakengly thinking it will feel like "therapy") when their pain is so raw.

    When we can share our bereavement experiences with others who are going through the same thing, we are participating in our own as well as each others healing. It is important to recognize that the wounded healer, in healing the wounds of others, is healing his or her own wound. This back and forth process of listening and being emotionally available to yourself and others is useful in moving forward. The humanness of a shared experience is healing; when we recognize that we are not alone and isolated, we feel a sense of security knowing what the larger community can offer.

    Also, know that while moving through the stages of grief:

    • Healing takes TIME.

    • Healing requires PATIENCE.

    • Healing is SLOW.

    • Healing means MOVING BACK AND FORTH IN PROGRESS.

    • Healing means BEING EMOTIONALLY AVAILABLE TO YOURSELF.

    • Healing means BEING KIND AND LESS JUDGMENTAL TO YOURSELF.

    • Healing means allowing whatever FEELINGS TO SURFACE, knowing that they are subject to change.

    • Healing means that SOME DAYS ARE EASIER THAN OTHERS.

    • Healing means ALLOWING feelings to be present.

    • Healing means its OK to CRY and express doubt.

    • Healing means the ability to take in the POSITIVE while acknowledging the negative.

    • Healing means allowing OTHERS to come in and offer support.

    • Healing employs SELF-ACCEPTANCE and allowing yourself to be “in the moment”.

    • Healing is about creating BALANCE in your life.

    • Healing is about enjoying NATURE and spending enough time to slow down, breathe the air and see the trees.

    • Healing is about EXERCISE and adequate NUTRITION.

    • Healing is about using POSITIVE AFFIRMATIONS about yourself and your world.

    • Healing is about feeling SAFE within yourself.

    • Healing is about LISTENING TO YOUR INNER VOICE.

    Gloria Lintermans

    THE HEALING POWER OF GRIEF: The Journey Through Loss to Life and Laughter (Sourcebooks, Inc.; ISBN 1-932783-48-2) by Gloria Lintermans & Marilyn Stolzman, Ph.D., L.M.F.T.

  • Report this Comment On January 12, 2009, at 9:48 AM, koandco wrote:

    'm a television researcher working on a documentary series called THE WILL and I'm looking for character driven stories told from the perspective of those who lived through them. In times of grief, wills often bring out greed and in order to help our viewers deal with the various pitfalls associated to wills, we would like to portray real-life stories on camera.

    if you would like to do so, please contact me at koandco@gmail.com

    Best,

    Katherine

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