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What to Know Before Deciding What to Do With Inherited Assets

You're not alone if you're wondering what to do with an inheritance. Many people who inherit money or other assets are unsure how to handle them. You have many options, but deciding without a strategy can be costly.

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Why Receiving an Inheritance Can Feel So Overwhelming

Figuring out what to do with an inheritance is about more than dollars. It’s often a juggle between doing right by your loved one’s legacy and avoiding financial missteps that can’t always be undone. Without a wealth strategy, well-intentioned decisions can lead to unnecessary taxes and missed opportunities.

42%1

The percentage of adults expecting an inheritance who feel very uncomfortable financially handling it.

58%1

The percentage of adults who will likely experience a medium-to-large impact from inflation on the sum they inherited.

$46,2002

The average U.S. inheritance
between 2016 and 2019.

1  NewYorkLife.com | 2 Annuity.org

What Are Some&#160;Costly<br/>Inheritance Mistakes?

What Are Some Costly
Inheritance Mistakes?

Most inheritance mistakes happen when decisions are made too quickly or without coordination:

  • Selling inherited investments before understanding tax implications
  • Mismanaging inherited retirement accounts, such as inherited IRAs
  • Making emotional or rushed investment decisions
  • Treating inherited assets separately from the rest of your finances

You can protect your wealth and avoid these common missteps by pausing to create a wealth strategy for your inherited assets.


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6 Questions to Help Decide What to Do With an Inheritance

Before you make any decision about inherited assets, it’s important to understand the tax rules, timing considerations, and long-term implications that aren’t immediately obvious.

Question #1:
What types of assets did you inherit—and how are they taxed?

Cash, investments, real estate, and retirement accounts are all treated differently. Understanding both the asset type and the tax rules attached to it is essential before taking action.

Question #2:
When will you need the money?

Some inherited dollars may need to support near-term expenses or income needs, while others are better suited for long-term goals. Timing plays a critical role in how assets should be handled.

Question #3:
How does the inheritance fit into your overall financial picture?

Inherited assets don’t exist in isolation. They can affect retirement plans, cash flow, taxes, and estate planning, which makes coordination important.

Question #4:
Should all inherited dollars be treated the same?

Often, the answer is no. Separating inherited assets by purpose—such as protection, income, or growth—can provide flexibility and reduce risk.

Question #5:
What decisions are irreversible?

Selling assets, taking distributions, or moving accounts can have permanent tax consequences. Knowing which choices can’t be undone helps avoid costly mistakes.

Question #6:
Are emotions influencing the timing of your decisions?

Grief and stress often accompany inheritance. Slowing down can help prevent rushed or emotional decisions that may conflict with long-term goals.

Strategy Transforms Uncertainty into Financial Confidence

It’s easy to feel overwhelmed by the number of rules, options, and potential pitfalls for an inheritance. But implementing a wealth strategy with a financial professional can help you move from worrying about making the “wrong” decision to feeling confident about choosing the best path forward.

Getting professional financial advice about inherited assets is especially valuable if you’re looking to:

Bring objectivity to decisions during an emotional period

Free up time and mental energy for other priorities

Clarify your financial goals and the steps to reach them

Stay accountable to a thoughtful, long-term plan

Meet Michael Ludwig,<br/>Your Wealth Strategist

Meet Michael Ludwig,
Your Wealth Strategist

Based in Lombard, Illinois, Michael Ludwig is among the estimated 12%3 of CERTIFIED FINANCIAL PLANNER™ professionals who are also Certified Public Accountants.

We apply this distinct preparation and our science-backed wealth management system to help protect your wealth during major life changes so you can:

  • Integrate tax strategy into every financial planning decision.
  • Minimize lifetime tax liability, not just for this year's return.
  • Avoid costly missteps from conflicting or siloed financial advice.

3 InvestmentNews.com

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What's the Advantage of One Person
Being Your CPA & Financial Advisor?

Inspired by Loved Ones.<br/>Committed to You.

Inspired by Loved Ones.
Committed to You.

Michael became a CFP™ professional and CPA after witnessing many friends and family, like his grandmother, struggle to find financial guidance they could trust.

Growing up, Michael Ludwig mowed the lawn for his grandmother, who grew up during the Great Depression. Every week, she gave Michael $5 and the same parting words, “Pay yourself first.” Her advice stuck with Michael. He saved diligently and grew an interest in investing.

When his grandmother was 75, a financial advisor put her funds in an annuity that had a 25-year surrender period, which, given her age, was not in her best interest.

Today, Michael guides clients through financial complexity with the transparency and objectivity that he wishes his grandmother had received.

“One thing I like a lot is that he explains things so a normal person can understand it.”
–Merilou G.

This testimonial and/or endorsement was given by clients of the financial advisor, and no compensation was provided directly or indirectly. This testimonial and/or endorsement is not a guarantee of future performance or investment success, and the testimonial and/or endorsement may not be representative of the experience of other customers. Please visit BrokerCheck (https://brokercheck.finra.org) to see more on the background of this professional.

Book Your Complimentary Wealth Strategy Consultation

Your best interests are our fiduciary obligation. On top of transparent fees, straightforward advice, and responsive communication, we offer a complimentary consultation to determine how a wealth strategy will work for you.

Need trusted guidance on
handling an inheritance?

Live in the
Chicago area?

Have at least $500,000
in investable assets?

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