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Sudden Wealth: What Do I Do Now?

Signature Wealth Concepts, LLC |

Inheriting wealth—whether through the passing of a loved one, the sale of a family business, or a legal settlement—can be a life-altering experience. While it may seem like a purely positive event, sudden wealth often brings emotional, financial, and even relational challenges. Many heirs are caught off guard by the complexity of what they’ve received and are unsure how to manage it responsibly.

Without proper planning, a windfall can quickly be diminished or even lost.  Sometimes, a large percentage of inherited wealth disappears within just a few years due to poor decisions, lack of planning, or avoidable tax consequences. This article outlines practical steps for those navigating the early stages of receiving sudden wealth, particularly through inheritance.

Pause Before Making Major Decisions

One of the most important things to do after receiving a sudden inheritance is… nothing—at least not right away. Sudden wealth often comes at a time of grief or transition. Making quick decisions while emotions are high can lead to costly mistakes.

Take the time to grieve, process the situation, and understand what you’ve inherited. Rushing into big purchases, investments, or giving money away may feel satisfying in the short term but could compromise your long-term financial security.

Build a Trusted Advisory Team

Receiving a significant inheritance brings with it new responsibilities. One of the smartest moves is to engage a team of professionals to guide you through the process. This team may include:

  • A financial professional to help develop a plan and investment strategy
  • A tax advisor or CPA to navigate tax implications and filing requirements
  • An estate attorney to ensure legal documents are in order and to help manage any inherited trusts or assets

These professionals can collaborate to help you understand the scope of your inheritance and how to manage it effectively in line with your values and goals.

Understand What You’ve Inherited

Inheritances can include many types of assets—cash, retirement accounts, brokerage investments, real estate, life insurance proceeds, collectibles, and even ownership in a family business. Each asset class comes with its own set of rules, tax consequences, and decisions:

  • Inherited IRAs or 401(k)s may require minimum distributions under new rules
  • Real estate may come with maintenance costs, property taxes, and capital gains implications
  • Investment accounts may offer a step-up in cost basis, reducing potential taxes

It’s essential to identify and classify each asset before making any moves. Don’t assume everything can be used freely or immediately.

Develop or Update a Comprehensive Financial Plan

An inheritance can reshape your entire financial future—if it’s integrated properly. This is an ideal time to revisit or create a comprehensive financial plan that reflects your new reality. That plan may include:

  • Debt reduction
  • Retirement and long-term savings
  • Education planning for children or grandchildren
  • Homeownership decisions
  • Philanthropic giving
  • Future estate planning

Aligning your decisions with your values ensures that the wealth serves a meaningful purpose and creates a sense of direction.

Be Strategic About Taxes*

Inheriting wealth can come with tax obligations, depending on the types of assets and how they are transferred. Some common tax considerations include:

  • Income taxes on inherited traditional IRAs or annuities
  • Capital gains taxes if assets are sold after appreciation
  • Estate taxes (less common due to high federal exemptions but still relevant in large estates or certain states)

Strategic planning, such as timing of distributions or use of trusts, can help reduce tax burdens and preserve more of the wealth.

* Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services.  You should consult with your own tax and legal professionals before proceeding with any course of action. 

Preserve the Wealth for the Long Term

It’s easy to feel like a sudden windfall can solve all problems, but without proper stewardship, wealth can fade quickly. Studies have shown that many heirs deplete their inheritance within five years. The key to lasting wealth is intentional planning, disciplined investing, and living below your means.

Consider working with a financial professional to create an investment strategy aligned with your goals, time horizon, and risk tolerance. Avoid making large purchases before establishing a solid foundation.

Honor the Legacy

In many cases, inherited wealth represents a lifetime of effort by a parent, grandparent, or loved one. Take the time to consider how you might honor that legacy—whether through charitable giving, funding education for future generations, preserving family traditions, or continuing a business.

Incorporating a sense of purpose into your planning can help you feel more connected to the wealth and more intentional in how you use it.

Final Thoughts

Sudden wealth can be a blessing—but only if handled wisely. By pausing, seeking professional guidance, and making deliberate choices, individuals can transform a one-time event into lasting financial security. The goal isn’t just to keep the wealth—it’s to make it meaningful, sustainable, and aligned with the values of both the giver and the recipient.

 

This article was curated by Signature Wealth Concepts and is being provided for informational purposes only based on our general understanding of the subject matter. Past market performance is not indicative of future results.

Duly registered and duly licensed financial professionals with Signature Wealth Concepts offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC (Equitable Financial Advisors in MI & TN); offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor; and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC; Equitable Network Insurance Agency of Utah LLC; Equitable Network of Puerto Rico, Inc.). Equitable Advisors and Equitable Network are affiliates and do not provide tax or legal advice or services. You should contact your personal tax and or legal advisors regarding your specific situation before taking action. Signature Wealth Concepts is not owned or operated by Equitable Advisors or Equitable Network. PPG-7936337.1(05/25)(exp.05/29)