Inheriting a large sum of money can be a real blessing—if you deal with the inheritance properly. If you don't handle the money the right way, it can turn into more of a nightmare than a dream. To protect yourself against financial disaster and drama, make sure you adhere to these "dos" and "don'ts," as you deal with a large inheritance.
Do: Park the money in a separate bank account.
If you deposit the money in your regular account, it will be very tempting to spend a little of it here and there until, before you know it, there's not much left. As soon as you receive the money, park it in a separate account. An online savings account is a good choice since typically it will take you a few days to access the funds and it will be harder for you to make impulse decisions.
Do: Pay attention to FDIC regulations.
Just make sure that if you have more than $250,000, you divide it into several savings accounts with a maximum of $250,000 in each one. Funds over $250,000 in any account are not guaranteed by the FDIC, so if the bank goes under, you may suffer a loss.
Do: Seek out expert advice from a certified financial planner.
You won't want to just leave the money sitting in a savings account since most savings accounts these days earn very little interest. But the best way to spend or invest the money will depend on your individual life circumstances. Work with a financial planner who has experience with private wealth management. Make sure you choose someone who has a good, honest track record. Letting a family member manage your funds is often a mistake—even if such person has financial knowledge—since family members may then feel entitled to part of the inheritance and this can complicate your relationship.
Don't: Tell everyone about your inheritance.
It's normal to be excited after you inherit a large sum. But this is not news that you should share on Facebook or write about in your blog. You probably shouldn't even tell family members—aside from your immediate family. Once others find out you have money, you'll start getting calls and emails from people who need a new roof, need their vet bills paid, or have a debt they think you should help them pay off. If you help one of them, you'll feel obligated to help them all, and before you know it, you won't have any money left. It's a lot easier to just not share the news of the inheritance.
Don't: Quit your job in haste.
The inheritance may seem like a large amount of money, but money does not go nearly as far as you think it might. Unless you're on the verge of retirement and are now simply retiring a year or two early after receiving the inheritance, it's generally best not to rush out and quit your day job. If you think perhaps you can afford not to work, discuss this with a financial advisor and come up with a detailed plan of how you'll handle the money before you take the leap.
