Expecting an inheritance?

Mar 13 2026

By: John Drapp

An inheritance can change your life, but only if it lasts. One study found that about one-third of Americans who received an inheritance saw their wealth decrease or stay the same afterward, which suggests they spent it all. Among baby boomers who inherited $100,000 or more, nearly one in five spent every dollar.

If you are expecting an inheritance, here are a few early steps can help it last well beyond the first few years.

Slow Down

Don't make big decisions right away. While you build a long-term plan, consider these steps:

Park the funds somewhere safe. A savings account, money market account, or certificate of deposit works well. The FDIC insures deposits only up to $250,000 per depositor, per insured bank, for each account ownership category, so larger sums may need to be spread across institutions.
Build (or boost) your emergency fund. Aim for at least six months of expenses. If you already have that covered, consider growing it to cover a full year.
Be careful with gifts to your children. A gift that is not properly structured can trigger gift tax or other negative income tax consequences. Understand the implications before you give.
Consider paying down debt. Using part of your inheritance to eliminate or reduce significant debts can strengthen your overall financial health.

Still Working? Invest in Your Retirement

Some financial experts suggest having saved one year's salary by age 30, three times your salary by 40, six times by 50, and eight times by 60. If you are behind, an inheritance can help you catch up.

If you are not contributing the maximum to your 401(k), consider increasing your contributions, especially if you are not yet receiving your employer's full match. If your employer does not offer a 401(k), start funding an IRA. Keep in mind that withdrawals from an inherited traditional IRA are included in your taxable income.

Build Your Professional Team

No one should manage a significant inheritance alone. The right advisors can help you protect and grow it:

Financial advisor: Evaluates your finances and builds a foundation for investing, credit and debt management, college savings, and retirement, along with larger goals like buying a home or investment property or starting a charitable foundation.
Insurance agent: Reviews your life, long-term care, and liability coverage so you and your family are protected.
Tax professional: Analyzes your cash flow and develops a plan to minimize capital gains and other income taxes.
Estate planning attorney: Here's where we come in. We can create or update your estate plan (everyone needs a will or revocable trust, medical directives, and a durable power of attorney), reduce or eliminate estate taxes, set up a gifting strategy, meet your charitable goals, create a family legacy, and protect your inheritance from creditors, predators, and lawsuits.

Make It a Lasting Legacy

With careful planning, an inheritance can support you for life and benefit your loved ones after you. Don't leave that plan to chance.

Call us at (203) 871-0356 to discuss how to receive, grow, protect, donate, and pass on your inheritance.

This information is subject to the terms of our disclaimer.

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