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.