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During the next 20 years or so, Americans will inherit an estimated $105 trillion as older Americans pass down their accumulated wealth to younger generations, in a phenomenon that has been dubbed the Great Wealth Transfer (1).<\/p>\n
That means there will be a lot of people who are surprised \u2014 even if pleasantly so \u2014 to be inheriting money and unsure about how best to manage it.<\/p>\n
Jeannie\u2019s mother left her a substantial legacy. While her family was comfortable during her childhood, she had no idea that her parents were scrupulous savers and investors. Now, in addition to her childhood home, which is worth approximately $1.5 million, she has inherited a portfolio of investments worth $6 million.<\/p>\n
Jeannie is shocked to find that her mother was so wealthy \u2014 and that she now has to manage real wealth for the first time in her life. While Jeannie was unprepared for her legacy, she also doesn\u2019t want to waste this opportunity to improve her life now and in the future.<\/p>\n
Here\u2019s what Jeannie could have done to avoid this situation in the first place, and what to do if you find yourself in a similar place.<\/p>\n
This problematic situation stems from a lack of communication around estate planning.<\/p>\n
It\u2019s a pretty common issue, too. In fact, the 2025 Family and Finance Study by Fidelity found that while 97% of families acknowledge the importance of talking about estate planning, almost half of those asked hadn\u2019t actually had the conversation yet (2).<\/p>\n
However, although so many older Americans may avoid talking about their estate plans, the adult children of this cohort are equally responsible for opening the conversation. Even if it may be awkward, it helps to frame the discussion as your desire to help them distribute their estate the way they want.<\/p>\n
In other words, Jeannie and her mother might have avoided this situation altogether if they had sat down and had the conversation beforehand.<\/p>\n
It\u2019s also important to know that it doesn\u2019t have to be a one-and-done talk. The conversation can come as part of a larger discussion about health care, a parent\u2019s decision about aging in place or moving to assisted living and their last wishes for legacy planning.<\/p>\n
There are several recommended approaches to carrying out this kind of conversation. For example, The New York Times recommends discussing a parent\u2019s current health, medical history and living arrangements, while also designating a point person in the family to carry out their wishes (3).<\/p>\n
Elsewhere, SSHK Law recommends that if your parents hesitate or avoid the conversation about end-of-life wishes, you can reassure them that you want to honor their choices, not take control of their estate (4).<\/p>\n
In this way, by breaking up the conversation into a series of smaller discussions, you can help ease anxiety and tension.<\/p>\n
Read More: I\u2019m almost 50 years old and don\u2019t have retirement savings. Is it too late?<\/a><\/p>\n Now that Jeannie has inherited her legacy, she has to start looking forward into the future rather than thinking about the past. In this respect, she is at least lucky that she has the time to make thoughtful choices about how to use the money her mother left behind.<\/p>\n She can also seek out advice.<\/p>\n Whenever your financial situation changes substantively, as it did for Jeannie, it\u2019s always a good idea to consult a professional. A financial advisor can guide you through some of the best ways to invest your inheritance to meet your goals \u2014 and advise you on the tax and legal implications.<\/p>\n For example, income from certain assets could bump you into a higher tax bracket. Additionally, an inherited IRA might be subject to the 10-year rule, meaning you have to withdraw all the funds within 10 years of the original account owner\u2019s death (5).<\/p>\n These details are crucial because they could really trip you up when you enter into a new financial situation, such as inheriting wealth.<\/p>\n If you want to learn more about the unique rules and opportunities your new situation will entail, it might help to seek out a professional advisor through Advisor.com<\/a>.<\/p>\n This online platform connects you with vetted financial advisors best suited to help you develop a plan for your new wealth.<\/p>\n Just enter a few details about your finances and goals, and Advisor.com\u2019s AI-powered matching tool will connect you with a qualified expert<\/a> best suited for your needs based on your unique financial goals and preferences.<\/p>\n Finding the right advisor isn\u2019t always easy \u2014 there\u2019s no one-size-fits-all solution. That\u2019s why Advisor.com lets you set up a free initial consultation<\/a> with no obligation to hire to see if they\u2019re the right fit for you.<\/p>\n With that kind of guidance, your surprise inheritance might additionally surprise you in all the ways it can multiply abundance in your life.<\/p>\n Once she\u2019s sought out advice, another option for Jeannie would be to put some of her legacy into an investment portfolio that\u2019s earmarked for retirement.<\/p>\n It\u2019s good advice for anybody in her position, especially considering that a 2025 survey by Northwestern Mutual found that 51% of Americans believed they are \u201csomewhat or very likely\u201d to outlive their savings in retirement (6), while a 2026 study by Clever Real Estate found that more than a quarter of current retirees (29%) say they have no savings at all to live on (7).<\/p>\n And you don\u2019t want to rely on Social Security in retirement, because those benefits only replace 40% of your pre-retirement income if you\u2019re an average earner (8). Plus, there\u2019s the possibility that the retirement fund financing Social Security benefits will be insolvent by as early as 2032, according to the Committee for a Responsible Federal Budget (9).<\/p>\n For these reasons, investing your inheritance now could give you greater retirement security and help you build a legacy for future generations.<\/p>\n However, it\u2019s important to maintain a diverse portfolio of assets.<\/p>\n If you\u2019re years away from retirement, you might keep the bulk of your portfolio in stocks and a smaller portion in bonds. For instant diversification, consider investing in S&P 500 index funds, giving you exposure to the 500 largest publicly traded companies. For the bond portion of your portfolio, consider a mix of corporate bonds, Treasuries and municipal bonds for tax diversification.<\/p>\n Diversifying outside of the stock market is equally critical, particularly given the recent volatility. For example, investing in commodities like gold can help stabilize your portfolio and ensure your retirement fund continues to grow.<\/p>\n A gold IRA with Priority Gold<\/a> is one option for building up your retirement fund that also provides significant tax advantages.<\/p>\n Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold<\/a>, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.<\/p>\n To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver<\/a> on qualifying purchases.<\/p>\n Another way Jeannie might diversify her investments is to invest in real estate. In this respect, Jeannie is very fortunate, as new investment platforms are making it easier than ever to tap into this market.<\/p>\n Like Jeannie, you can now tap into this market by investing in shares of vacation homes or rental properties through Arrived<\/a>.<\/p>\n Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties<\/a>, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.<\/p>\n To get started, simply browse through their selection of vetted properties<\/a>, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100<\/a>, potentially earning monthly dividends.<\/p>\n For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match<\/a>.<\/p>\n With all of these financial decisions to make, Jeannie doesn\u2019t have to think about just growing her windfall. She could invest in her family.<\/p>\n For example, she can invest in her children\u2019s education \u2014 especially if she is one of the 70% of American parents who are worried about not having enough funds to cover their children\u2019s education, according to one survey conducted by Discover (10). If that appeals to her, she could put some of her inheritance into a 529 plan toward her children’s college education, allowing it to grow tax-free.<\/p>\n While that\u2019s one good option, she can also think about her more pressing needs. After all, there\u2019s nothing wrong with using proceeds from an inheritance to improve your life and that of your family \u2014 right now.<\/p>\n She could think about her housing, for instance. If she\u2019s living in cramped quarters, she might use some of her money to finish off her home\u2019s basement for extra living space. Or she could just buy a larger home.<\/p>\n If you\u2019re like Jeannie and considering buying a new home, even a small rate reduction can translate into significant savings over the life of a loan.<\/p>\n That\u2019s why Freddie Mac recommends shopping around and obtaining quotes from three to five lenders to secure the best possible mortgage rate possible<\/a>.<\/p>\n To make this process easier, there are places like the Mortgage Research Center (MRC)<\/a>, which can help you quickly compare rates and estimated monthly payments from multiple vetted lenders.<\/p>\n By entering just a few basic details \u2014 such as your zip code, property type, price range and annual income \u2014 you can view mortgage offers tailored to your needs<\/a> and shop with confidence.<\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Cerulli Associates (1<\/a>); Fidelity (2<\/a>); The New York Times (3<\/a>); SSHK Law (4<\/a>); Teachers Insurance and Annuity Association of America (5<\/a>); Northwestern Mutual (6<\/a>); Clever Real Estate (7<\/a>); National Council on Aging (8<\/a>); Committee for a Responsible Federal Budget (9<\/a>); Discover (10<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. 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