I Just Received an Inheritance—What Should I Do Next?

Receiving an inheritance can be both a financial blessing and an emotional experience. Whether you’ve inherited cash, investments, real estate, a family business, or other valuable assets, it’s important to make thoughtful decisions before taking action. An inheritance has the potential to improve your financial future, but without proper planning, it can also create unexpected tax consequences or become vulnerable to creditors, lawsuits, divorce, or poor estate planning.

Working with an experienced estate planning attorney in Missouri can help you preserve your inheritance and ensure it benefits both you and your loved ones for years to come.

Take Time Before Making Financial Decisions

Your first instinct may be to spend, invest, or share your inheritance. However, rushing into major financial decisions can lead to costly mistakes.

If your inheritance follows the loss of a loved one, emotions may influence your judgment. Give yourself time to fully understand what you’ve inherited before making significant changes. Create a complete inventory of your inherited assets, including:

• Cash and bank accounts
• Investment accounts
• Retirement accounts
• Real estate
• Business interests
• Personal property and collectibles

Knowing exactly what you’ve inherited provides a solid foundation for making informed financial and legal decisions.

Understand the Tax Implications

Many people assume inheritances are completely tax-free, but that isn’t always the case.

Although Missouri does not have an inheritance tax, inherited assets may still carry important tax considerations. Certain inherited retirement accounts, such as IRAs and 401(k)s, are subject to distribution rules that may generate taxable income.

Inherited real estate and stocks often receive a step-up in cost basis, meaning capital gains are generally calculated using the property’s fair market value on the date of the original owner’s death rather than the original purchase price. Understanding these rules before selling inherited assets can potentially save thousands of dollars in taxes.

An estate planning attorney in Missouri can work alongside your financial and tax professionals to help you understand how these rules apply to your specific situation.

Create a Plan Before Spending Your Inheritance

An inheritance presents an opportunity to strengthen your long-term financial security rather than simply increasing your spending.

Many people choose to:

• Pay off high-interest debt
• Build or replenish an emergency fund
• Increase retirement savings
• Fund education for themselves or family members
• Diversify investments
• Set aside funds for future healthcare or long-term care expenses

Every situation is unique. Developing a thoughtful financial strategy helps ensure your inheritance supports your personal goals instead of disappearing over time.

Protect Your Inheritance with the Right Estate Planning Documents

One of the biggest mistakes people make after receiving an inheritance is failing to update their own estate plan.

An increase in wealth often means your existing estate planning documents no longer reflect your financial situation. Working with an experienced estate planning attorney in Missouri allows you to review and update documents that protect both your inheritance and your loved ones.

Depending on your circumstances, your attorney may recommend updating or creating:

• A Revocable Living Trust
• A Last Will and Testament
• Durable Financial Power of Attorney
• Healthcare Power of Attorney
• Beneficiary designations
• Transfer on Death (TOD) or Payable on Death (POD) designations

For some individuals, placing inherited assets into a properly drafted trust can provide additional protection from probate, simplify asset management, and help preserve wealth for future generations.

Carefully Evaluate Inherited Real Estate or Business Interests

Inherited real estate and family businesses require careful planning.

If you’ve inherited a home, rental property, or commercial real estate, you’ll need to evaluate whether keeping, selling, or renting the property best aligns with your financial goals. Each option carries different financial, tax, and maintenance considerations.

Similarly, inheriting part of a business may involve ownership responsibilities, buyout opportunities, or long-term management decisions. Obtaining professional legal and financial guidance before making these decisions can help avoid disputes and costly mistakes.

Avoid Common Inheritance Mistakes

Without a plan, inherited wealth can disappear surprisingly quickly.

Some of the most common mistakes include:

• Treating the inheritance as “extra spending money”
• Making large purchases immediately
• Investing too aggressively without diversification
• Ignoring tax consequences
• Failing to update estate planning documents
• Leaving inherited assets unprotected from future legal or financial risks

By working with an experienced estate planning attorney in Missouri, you can develop a strategy that protects your inheritance while supporting your long-term financial and family goals.

Key Takeaways

Receiving an inheritance is an opportunity to improve your financial future—but only if you approach it thoughtfully.

Take time to understand what you’ve inherited, learn the tax implications, create a financial strategy, and most importantly, update your estate plan. The right legal guidance can help protect your inheritance from unnecessary taxes, probate complications, and future risks while preserving your legacy for the next generation.

Frequently Asked Questions

1. Should I update my estate plan after receiving an inheritance?

Yes. Receiving an inheritance often changes your financial picture. Reviewing your will, trust, powers of attorney, and beneficiary designations helps ensure your estate plan continues to reflect your wishes and protects your newly acquired assets.

2. Can a trust help protect my inherited assets?

Depending on your goals, a properly drafted trust may help avoid probate, simplify asset management, protect beneficiaries, and preserve inherited wealth for future generations. An estate planning attorney in Missouri can determine whether a trust is appropriate for your situation.

3. Are inheritances taxable in Missouri?

Missouri does not impose an inheritance tax. However, inherited retirement accounts, investment assets, and future capital gains may still have tax consequences. Understanding these rules before making financial decisions can help minimize unnecessary taxes.

4. When should I contact an estate planning attorney after receiving an inheritance?

It’s best to meet with an estate planning attorney soon after receiving your inheritance and before making major financial decisions. Early planning can help protect your assets, update your estate plan, and ensure your inheritance supports your long-term financial goals.

Contact Beck, Lenox & Stolzer Estate Planning & Elder Law, LLC for all of your estate planning needs by booking a call: https://beckelderlaw.com/book-a-call/

Reference: Merrill Lynch “Q&A: How can I make the most of my inheritance?”