By Danny Clark, CFP®, Certified Private Wealth Advisor®
You just got the call that there is an inheritance coming your way—maybe from a parent, grandparent, or other relative. There’s grief mixed with gratitude, and underneath it all a question you weren’t quite prepared to answer: What do I do with this money?
For professionals in their 30s and 40s juggling busy careers, young families, and ambitious goals, a sudden inheritance can feel like both an opportunity and a weight. If handled properly, it can fund your kids’ education, accelerate your path to financial freedom, or buy you the flexibility to take that career risk you’ve been considering. If done poorly, it vanishes faster than you’d think—absorbed into lifestyle creep, hasty decisions, or well-meaning but poorly timed investments.
Here’s how to approach an inheritance with intention.
Hit Pause Before You Do Anything
The first move is counterintuitive: don’t move at all. When money hits your account, there is pressure, both internal and external, to do something with it. Friends suggest investments and family members float ideas. You start browsing real estate listings or researching that business idea you’ve been sitting on. But you need to resist the urge to make any quick decisions.
Take three to six months and let things settle. Put the funds somewhere safe and liquid, such as a high-yield savings account or money market fund, and just breathe. This pause isn’t procrastination; it’s strategic. Emotional decisions made in the immediate aftermath of a loss rarely age well. So instead of losing an opportunity by waiting, you’re guarding yourself from making mistakes you can’t undo.
Get Clarity Around Where You Actually Stand
Before you change anything, you need to know what you’re working with. Take a complete inventory of your finances:
- What is your household income and monthly expenses?
- Do you have any outstanding debt?
- How much do you have in savings and investments?
Most people overestimate how financially secure they are, and an inheritance can create a false sense that everything’s suddenly “fixed.”
If you’re carrying high-interest debt, living paycheck to paycheck despite a strong income, or lacking an emergency fund, the inheritance doesn’t erase those realities—it just gives you a chance to address them. Understanding your baseline helps you deploy the money in ways that genuinely move the needle rather than just covering up poor habits.
Decide What This Money Is Actually For
Money without intention becomes nothing more than spending. So before you start allocating, ask yourself: What do I want this inheritance to accomplish?
Think five years out, then ten. What would make you look back and feel like you managed this well? Maybe it’s:
- Fully funding 529 plans so your kids graduate debt-free
- Buying a home in a neighborhood that supports your family’s lifestyle
- Creating enough passive income to reduce your work hours or pivot careers
- Building a financial cushion that lets you take bigger risks professionally
Whatever your goals, name them, write them down, and share them with your spouse. This step keeps you from defaulting to vague goals like “Grow it” or “Make smart investments,” both of which lead nowhere specific.
And watch out for lifestyle creep. Just because you can afford the bigger house, the nicer car, or the private school doesn’t mean you should pull the trigger. Upgrades aren’t inherently bad, but they need to fit into your financial plan, not hijack it.
Build a Cash-Flow Strategy That Works for You
Inheritance is usually a lump sum, which means it doesn’t automatically replace income. If your goal is flexibility—maybe scaling back at work, funding a sabbatical, or just feeling less financial pressure—you need a strategy that turns capital into consistent cash flow.
This might mean structuring investments to generate dividends or interest. It could involve real estate that produces rental income. Or it might look like positioning assets in a way that you can systematically draw from them without depleting the principal too quickly.
You want this money working for you in a way that aligns with how you actually want to live, not just sitting in an account or locked into something illiquid that doesn’t serve your near-term needs.
Bring in the Right Team
At this level of wealth, DIY planning stops being efficient and starts being expensive. You don’t need to figure this out alone, and honestly, it’s better to not even try.
An experienced wealth advisor can help you map out a strategy that balances growth, liquidity, and risk. A CPA prevents you from being blindsided by taxes since inheritance can come with tax implications depending on the asset type and how you handle it. And an estate attorney helps you update your own planning so this wealth transitions smoothly if something happens to you.
These professionals shouldn’t be optional or viewed as luxuries; they’re insurance against costly mistakes.
Don’t Ignore the Emotional Side
An inheritance is often accompanied by loss, family dynamics, and responsibility you didn’t ask for.
Maybe there is guilt about receiving money while others got less or nothing at all. Maybe there is tension with siblings or extended family. Maybe you’re wrestling with what your parents would have wanted you to do with it, or feeling the weight of not messing this up for your own kids.
Those feelings are real, and they matter. Ignoring them doesn’t make them go away; it just makes them show up in your financial decisions later, usually in ways you won’t recognize until it’s too late.
Here’s something worth remembering: Money doesn’t change your emotional state; it magnifies it. Happiness grows with newfound wealth only if it existed before. An inheritance won’t fix a struggling marriage, heal strained family relationships, or fill a void in your life. If you’re chasing contentment through what this money can buy, you’ll likely find yourself disappointed.
If this inheritance carries emotional baggage, it’s smart to talk through it with your spouse, a trusted advisor, or even a therapist. Financial decisions are never purely financial, and pretending otherwise often leads to regret.
Make it a Springboard, Not a Setback
Yes, an inheritance can change your trajectory, but only if you treat it with the seriousness it deserves. It’s not Monopoly money to blow on short-term gratification. It’s a tool that, used well, can fund the life you actually want to live.
The difference between people who manage inheritance well and those who don’t usually comes down to one thing: intentionality. Having a plan, knowing what the money is for, and building systems that make it work over the long term.
Have you recently inherited money or expect to? You don’t have to navigate this alone. At Solidarity Wealth, we help professionals and families turn sudden wealth into lasting financial confidence. Let’s talk about what that could look like for you.
Reach out to us at info@solidaritywealth.com or call 385-374-1665 to schedule a discovery call.
Frequently Asked Questions About Inheriting Money
How long should I wait before investing an inheritance?
Most financial advisors recommend waiting at least three to six months before making any major investment decisions with inherited money. This waiting period gives you time to process the emotional aspects of the inheritance, understand your complete financial picture, and develop a clear plan for the money. During this time, keep the funds in a high-yield savings account or money market fund where they’re safe and accessible. Quick decisions made in the immediate aftermath of losing someone rarely turn out well.
Do I have to pay taxes on money I inherit?
It depends on what you inherit and where you live. Most inheritances aren’t subject to federal income tax; you don’t pay taxes just for receiving the money. However, there are some exceptions. If you inherit a retirement account like an IRA or 401(k), you’ll owe income taxes when you take distributions. Some states have inheritance or estate taxes that could apply. And if you inherit assets that generate income (like rental property or dividend-paying stocks), you’ll owe taxes on that income going forward. The tax situation gets complicated quickly, which is why working with a financial advisor and CPA who understand inheritance tax rules is worth the investment.
What’s the biggest mistake people make when they inherit money?
The biggest mistake is treating inherited money like found money, something extra that doesn’t need the same careful planning as earned income. This mindset leads to lifestyle inflation, impulse purchases, and poorly thought-out investments. People upgrade their homes, buy new cars, or invest in their brother-in-law’s startup without stopping to ask whether these decisions align with their long-term financial goals. The inheritance that could have funded their kids’ college education or provided financial independence ends up gone within a few years. The key is pausing, planning, and being intentional about every dollar before you spend or invest it.
About Danny
Danny Clark has a passion for serving successful families and making a positive impact in their lives. With over a decade of experience in the financial services and banking industry, he creates personalized retirement and financial plans for families to help them pursue their financial and family goals throughout their life. Danny’s experience in serving some of Park City’s most established families along with the deep experience, skill, and services of the Solidarity Wealth team allow Danny the opportunity to serve a growing number of successful families.
Prior to joining Solidarity Wealth, Danny served as a Wealth Advisor at another firm, and before that spent 12 years at Wells Fargo in Park City as a regional private banker. At Wells Fargo, Danny was responsible for developing lifelong relationships with families, while developing tailored banking, credit, and retirement solutions to help his clients be successful in their financial journey.
Danny has his bachelor’s degree in business management and holds the Certified Private Wealth Advisor® designation. He and his wife, Lindsay, are Park City natives and raising their own family. In his free time, Danny is an avid golfer and skier, and enjoys spending time with his family.
Solidarity Wealth is a registered investment adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Solidarity Wealth and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Solidarity Wealth unless a client service agreement is in place.
