Using & managing an inheritance

For heirs, the loss of a loved one is often devastating and making decisions about how to use an inheritance can be daunting. It is important to remember, though, that your benefactor included you because he or she wanted to protect and provide for you. Use your inheritance wisely—honor the memory of your loved one, prepare for your future, or just do something that makes you happy. Whether it's a huge windfall or a more modest sum that comes your way, here are some ideas for managing inheritance if you're not sure what to do.

Take a break

During such an emotional time, it may be difficult to make decisions that could potentially affect your long-term goals. Take time to grieve and consider depositing your inheritance in a savings account until you know what you want to do with it.

Get away

You may want to use part of your inheritance to take a vacation. Whether it's to a place that was dear to your benefactor or a family vacation to relax after the stress of losing a loved one, taking a trip can help clear your mind and give you time to make peace with your loss.

Consider investing

As soon as you are able to, consult your financial advisor about your next financial move. Evaluate your goals for the next 10, 20, or 30 years, and see how the inheritance can help you get there. This may mean setting up a retirement account or trust, or using part of the money to purchase property.

Pay off debt

In most economic climates, but especially in a recessionary environment, it makes sense to use some portion of a large windfall to pay off credit cards, car loans, or other outstanding debts.

In memory

If you're looking for a way to use the inheritance to keep your loved one's memory alive, one option is to start a scholarship fund in his or her name. A scholarship for high school or college students is a great way to use your loved one's legacy as a way of helping students and giving back to the community.

You can also donate some or all of the inheritance to a cause your loved one was involved in or passionate about.

There are lots of things to deal with after a loved one's death, especially if a gift has been left for you. Before you do anything with an inheritance, be sure to evaluate your financial status and goals to most efficiently and respectfully utilize what you've been given.