Suze Orman: How Long You Must Wait Before Spending or Investing Your Inheritance

If you’re among the 15% of American adults who expect to get an inheritance in the next decade, it’s important to take your time when deciding what to do with it. After all, inheriting money can be exciting and terrifying all at once.

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Suddenly, you have a substantial sum of money, but you’re likely also sad about losing a loved one. For these reasons and more, financial expert Suze Orman recommends waiting six months before doing anything with an inheritance.

While you might want to immediately pay off your house or take an exotic family vacation, Orman explains that it’s important to avoid making any financial moves at first. Here’s why.

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Why 6 Months?

Six months allows you time to process your emotions. Whether you were close to the person who gave you the inheritance or it came out of nowhere, it still takes time to adjust to the idea of unexpected money.

Grief is a powerful emotion, and it can prevent you from thinking clearly. It also makes you more vulnerable to external pressures, like a financial advisor or family member pressuring you to do something with your inheritance that you might not want to.

While there is no time frame or time limit on grief, waiting six months gives you time to cope and readjust to your new normal.

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Where To Keep Your Money During This Time

While you’re waiting to decide what to do with your cash, Orman recommends keeping your money in a safe, low-risk account. On her podcast , Orman shared a story of a woman who was pressured into rushing into an investment after her husband passed away.

This widow, who inherited $7 million, initially held her money in a money market account, as Orman suggests. However, a financial advisor convinced her otherwise and pushed her into investments that were not the best choices for her.

Unfortunately, unsavory people can take advantage of others during difficult moments, which is another reason to park your money safely and wait until you can make better decisions for yourself.

Determine Your Financial Goals

After the initial six-month waiting period, a good next step is to decide your financial goals. For example, some people want to live a debt-free life. Others want to retire . Or, you may have dreams of traveling the world.

Knowing what you want can help you determine what to do with your inheritance. Giving yourself several months of time and space allows you to think about next steps. Remember that although many people will have opinions on how you should use your inheritance, only you get to make those decisions.

Consulting with people you trust, including financial advisors who are fiduciaries, can help, but ultimately your goals and dreams should be your priority. If you decide you want to work with an advisor, interview several and explain your goals to them. Only work with someone who has your best interests in mind, not someone who tries hard to sell you specific products so they can earn a commission.

Avoid Common Inheritance Pitfalls

If you want to avoid other inheritance mistakes people commonly make, something else to consider is the tax implications of your inheritance. The IRS has a quiz you can take to find out whether or not some or all of your inheritance is taxable. An accountant can also help you determine this.

Another common mistake some people make is overspending. When you receive a large sum of money unexpectedly, it might make you feel like you can spend without thinking. While a large part of this is feeling financially secure due to getting the inheritance, sometimes it can lead people to spend more extravagantly, especially if they’re grieving.

Final Thoughts

Getting an unexpected windfall can be overwhelming when you’re grieving. That’s why Suze Orman suggests people wait six months before making a decision. During that time, you can keep the money safe in an account until you’re ready to use it or invest it how you want.

The most important thing to do, especially when inheriting a large sum of money, is to know your goals for the money and find people you trust. It’s a good idea to have an attorney and an accountant to help you ensure your file taxes correctly.

Additionally, if you don’t feel comfortable managing your money alone, find a financial advisor who is a fiduciary, meaning they are legally required to act in your best interest, not their own. A fee-only Certified Financial Planner is another type of adviser who charges a flat rate to help you with your finances, rather than earning money from your investments.

This article originally appeared on GOBankingRates.com : Suze Orman: How Long You Must Wait Before Spending or Investing Your Inheritance