Inherited Wealth & What to Do With it
If the inheritance represents a larger sum of money than you typically deal with, look to a financial professional to learn about the options you have to meet your specific goals. Visit UECU.org for additional resources.
Managing a Windfall: On the surface, inheriting a big lump sum can seem purely positive. But transfers of wealth can also be fraught with anxiety, often because the inheritance comes following the loss of a loved one. When you’re suddenly faced with making decisions you may not have been prepared for, it can be a lot to take on.
Pause to Process: While some people may want to push ahead, it’s important not to feel pressured to make quick decisions. Why? Because grief and rushed financial choices don’t mix well. Take time to pause and process what has happened. In the days after learning about an inheritance, you should also:
- Gather important documents
- Notify an estate attorney and/or financial planner
- Take time to reflect on what the inheritance may represent
Consider Tax Implications: While taxes shouldn’t drive the entire decision-making process, it’s vital to keep them in mind. Consider the following:
- Retirement Accounts – If the inheritance includes retirement accounts from a spouse, you could consider strategic Roth conversions over time.
- Beneficiaries – For non-spouse beneficiaries, the focus can be on timing distributions in a way that aligns with life transitions and income levels.
- Work with a tax professional. Work with a tax professional to explore strategies that may help reduce the overall tax burden over time — whether that’s spreading distributions out across multiple years, giving to charity in a tax-smart way, or using newly inherited assets to fund long-term goals efficiently.
Prioritize Financial Goals with Intention: Take some time to prepare a plan for your inheritance. Consider these steps:
- First, write out your financial goals.
- Second, prioritize your goals by importance and time horizon.
Put Protections in Place: Just because you’ve received an inheritance doesn’t mean it’s automatically safe. Those measures include:
- Keeping assets separate from marital property
- Updating or creating trusts
- Revisiting insurance coverage
- Refreshing estate documents, including beneficiary designations and wills
Create Your Own Estate Plan: An estate plan ensures your assets are distributed according to your wishes, can provide for your loved ones, name guardians for minor children, and potentially reduce taxes and avoid probate court. Without a plan, state laws will determine how your assets are distributed.
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*Estate planning is an important step, and Legal Karma will make the process simple and accessible. While Legal Karma provides tools to help you create an estate plan, they are not a law firm and do not offer legal advice. Using these services is not a substitute for a lawyer and does not create an attorney-client relationship. If you have complex legal questions or need personalized advice, UECU and Legal Karma encourage you to consult a licensed attorney. UECU members are eligible for a 20% discount. The offer is valid on Estate Planning packages purchased on or before June 30, 2026. Offer is subject to change with no notice to you.
Online Source: Jean Chatzky, SavvyMoney, “Inherited Wealth and What to Do With it,” Nov. 20, 2025
