Inheriting money can be a powerful opportunity—and a deeply emotional experience. Whether it comes unexpectedly or after years of preparation, a financial windfall can shift your trajectory. But without clarity and strategy, it can also slip away faster than you think. At Stone Oak Wealth, we help families steward their inheritance with intention—honoring the legacy behind the gift while making choices that align with long-term goals. If you expect to receive an inheritance one day, a few practical steps can make all the difference.
According to the Federal Reserve’s Survey of Consumer Finances, taken every three years, slightly more than one in five U.S. households had received an inheritance as of 2022.1 If you expect to receive an inheritance one day, these tips may help you better manage your financial windfall.
Wait a while before you act. Emotions run high after the death of a loved one. You might regret quitting your job, buying a sports car, or making other costly decisions before you have thought them through. Consider how the funds might be used to strengthen your financial position now and over the long term. You may also want to be discreet. Telling people that you have inherited a substantial amount of money may lead to unwanted advice, business or investment solicitations, and requests for financial support.
Boost (don’t blow up) your lifestyle. If you have a large balance on a high-interest credit card or vehicle loan, consider paying it off and using the increased cash flow to save more toward your retirement or other long-term goals. Whether it would be wise to pay off your mortgage depends on your individual circumstances and goals. Investing represents an opportunity to grow an inheritance and potentially make it last longer. You could use any income generated by your portfolio to supplement your paycheck, which might allow you to live better now while preserving the bulk of the money for future needs, such as a child’s education or your retirement.
Take advantage of tax deferral. If you inherit tax-deferred assets, such as those in a traditional 401(k) or IRA, keep in mind that withdrawals are taxed as ordinary income. You could choose to cash out and pay the taxes all at once, or you might consider transferring the inherited funds to a properly titled beneficiary IRA. Inherited retirement funds can be withdrawn over a period of up to 10 years, although some beneficiaries may have to take yearly required minimum distributions (if the original owner had started taking them). Spouses and other eligible designated beneficiaries receive preferential treatment. The rules and deadlines for handling inherited retirement account assets and taking distributions are complex. Because each choice could have far-reaching implications, be sure to seek tax guidance.
Consider meeting with a financial professional. Discussing your situation with someone outside of your family may help you gain perspective, clarify your goals, and make sound decisions. Although there is no assurance that working with a financial professional will improve investment results, he or she can consider your objectives and available resources and help you evaluate appropriate financial strategies.
The bottom line is this: an inheritance isn’t just a transfer of money—it’s a reflection of someone’s life, values, and hopes for your future. Applying that responsibility well takes more than emotion—it takes wisdom. Whether it’s understanding tax implications, managing investments, or defining your next steps, we’re here to guide you through it with clarity and care. At Stone Oak Wealth, we help clients preserve not only their inheritance, but the peace and purpose it was meant to bring.
All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.
1) The Washington Post, November 10, 2023
In the Word
Every man shall give as he is able, according to the blessing of the Lord your God that he has given you.
Deuteronomy 16:17
As Labor Day approaches, we celebrate the fruits of hard work—but also the heart behind our giving. God calls us to give not equally, but faithfully, in response to His blessings.
Whether you’re running a business sale or planning for the next chapter, generosity isn’t a transaction—it’s a reflection of trust. At Stone Oak Wealth, we help you turn success into significance by aligning your financial life with your values.
Sources: Broadridge Investment Management Solutions
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