The average person only saves half of what they receive. With Americans living longer, we would do well to put most of an inheritance away.
There are two groups of people when it comes to inheritances: those who view the money as a legacy and those who view it as a lottery win. The first group usually feel a responsibility to use it wisely because they acknowledge that their parents worked hard for the windfall they are receiving.
You should pause as soon as you receive an inheritance. Then consider any tax implications if you liquidate assets. Next, look at the potential effect of your age, Social Security and any pension entitlements. After that, you should consider whether the inheritance can be used to pay off credit cards and other debt or provide an emergency fund you never had. You might also be able to help other people with your inheritance. And finally once you have considered all of those possibilities, then you could consider indulging yourself.
While most people leave everything to their kids, perhaps consider leaving a bequest to charity. You don’t have to be wealthy or childless to do this. It is as simple as writing something to this effect in your will: “I give one-third of my estate to my daughter and the remainder in equal parts to these three charities.” I’m not recommending that specific language for every circumstance and it may make more sense to specify an amount or percentage for the charities you wish to benefit. The best advice is to advise your estate planning attorney of your desires and then discuss possible alternative means of achieving them.