Receiving a large inheritance can be a life-changing event, but it can also come with a lot of responsibility. It is essential to have a solid plan in place to manage your new wealth and make it work for you in the long term. Here are some steps to take when managing a large inheritance.

Take a Deep Breath and Assess the Situation 

It is important to take some time to process the news and understand the full scope of what you are receiving. This includes determining the value of the assets and any associated tax implications.

Consider consulting with professionals

Depending on the size of the inheritance, it may be a good idea to seek guidance from professionals such as financial planners, estate attorneys, and accountants. These experts can help you navigate complex financial matters and create a plan that aligns with your long-term goals.

Pay off your debts

One of the first things you should consider when receiving an inheritance is paying off any outstanding debts you may still have. This can include credit card balances, student loans or a mortgage. By eliminating these obligations, you can free up more of your income to invest in other areas. On the other hand, you can also choose to put money into investments that will have a higher rate of return than the interest you are being charged on your debt. Of course, this choice will come with higher risk. 

Create a budget

Once you have paid all of your debts, you should establish a budget for your new wealth. This can help you determine how much money you will need to cover your expenses and how much you can invest or save for the future.

Diversify your Investments

A common mistake that many beneficiaries make is putting all of their money into one investment or asset. Diversifying your portfolio can minimize risk and maximize returns. This can include investing in stocks, bonds, real estate, and other assets. Be sure to balance your portfolio in a way that aligns with your financial objectives and risk tolerance.

Consider Philanthropy

If you are in a position to do so, consider giving back to causes that are dear to your heart. Donating a portion of your inheritance to charity can be a meaningful way to honor the memory of the person who left you the inheritance while also making a positive impact in your community.

Be Mindful of Taxes

Inheritance taxes can vary depending on the state you live in, and the value of the assets inherited. Be sure to work with a professional to understand the tax implications and create a plan to minimize the impact on your inheritance.

Keep a long-term Perspective

Remember that managing a large inheritance is a marathon, not a sprint. Be patient and make decisions that will benefit you in the long term. This may mean delaying large purchases or investments until you have established a solid financial plan. A Waller and Wax professional financial advisor may be able to help you in putting together the best plan for you and your loved ones.