If you’ve recently inherited money, you may feel two things at once: gratitude and pressure.
Pressure to “do the right thing.” Pressure to act quickly. Pressure from family, the news, or your own inner voice.
Here’s the good news: you usually don’t need to make big moves right away. In fact, slowing down can be one of the smartest financial decisions you make.
Below are six practical decisions to consider before you spend or invest an inheritance, with a few Pittsburgh-specific reminders along the way.
1) Decide what this money needs to do for you
Before you pick investments, pick your purpose.
Ask yourself:
- Is this for retirement security?
- Is it for a home upgrade or paying off a mortgage?
- Do you need a stronger emergency fund?
- Is part of it meant for kids/grandkids or charity?
A simple way to organize it is by time frame:
- Now–2 years: cash needs, taxes, repairs
- 3–10 years: college, moving, reducing work hours
- 10+ years: retirement, legacy goals
When you know the “why,” the “where should it go?” gets much easier.
2) Get clear on what you inherited
“Inheriting money” can mean a lot of different things:
- Cash
- An inherited IRA
- A brokerage account with stocks and funds
- A house or other property
- Life insurance proceeds
- A share of a family business
The details matter. Especially titles and beneficiaries.
Before you sell, transfer, or reinvest anything, gather documents and confirm:
- Who owns the asset right now?
- Is it going through probate or a trust?
- Are there deadlines for distributions?
This step prevents mistakes that are hard to unwind later.
3) Understand taxes before you make a taxable move
Taxes are where inheritances get tricky.
Some quick, general reminders:
- Inherited retirement accounts often create taxable income when you take withdrawals.
- Many taxable investment accounts may receive a step-up in cost basis (which can reduce capital gains taxes later).
- Pennsylvania has an inheritance tax, and the rules depend on your relationship to the person who passed away.
The main point: try not to guess. One early conversation with a CPA can save a lot of frustration.
4) Pick a safe “holding spot” while you decide
You don’t need to invest the money immediately just because it arrived.
If you’re unsure, it’s often reasonable to hold cash temporarily in a savings or money market option while you build a plan.
Also, give yourself a timeline.
For example:
- This month: paperwork, account set-up, tax estimates
- Next 60–90 days: decide what stays liquid, what gets invested, and why
A pause is not the same thing as doing nothing. It’s giving yourself room to think.
5) If you invest, match the plan to your life (not the headlines)
Once you know your goals and any tax constraints, then you can talk investments.
A few things to consider:
- When will you need the money? Short-term money usually needs a different approach than long-term retirement money.
- How much risk can you tolerate? Some people are comfortable with ups and downs. Others aren’t. Both are valid.
- Are you inheriting a concentrated position? It’s common to inherit a portfolio that’s heavy in one stock or one strategy. That may be worth reviewing for diversification.
The goal isn’t to find a “perfect” investment. The goal is to build something you can stick with.
6) Protect the inheritance from common “leaks”
Most inheritance problems aren’t one big blow-up. They’re slow drips.
A few common ones:
- Lifestyle creep: new monthly spending that becomes permanent
- Rushed debt payoffs: sometimes smart, sometimes not—depends on the full picture
- Family pressure: loans or gifts made without clear boundaries
- Outdated documents: beneficiaries, wills, powers of attorney, and insurance not updated after a major life change
If you plan to help family, it’s okay to do it thoughtfully—and in writing if needed.
Common Questions People Ask After Inheriting Money
Should I pay off debt first or invest?
It depends on the interest rate, your cash reserves, upcoming expenses, and your goals. High-interest debt is often a priority, but it’s not always the first move.
Do I owe taxes on an inheritance in Pennsylvania?
Pennsylvania does have an inheritance tax. Some inherited assets can also create income taxes later (for example, when withdrawing from inherited retirement accounts). Ask a tax professional about your specific situation.
What is an inherited IRA, and what are the rules?
An inherited IRA is a retirement account you receive as a beneficiary. Distribution rules vary based on who you are (spouse vs. non-spouse), and timing matters. Taking withdrawals without a plan can lead to higher taxes than necessary.
Should I keep the investments I inherited?
Maybe. But you should still review them. The portfolio was built for someone else’s goals and risk tolerance—not necessarily yours.
Should I tell people about my inheritance?
You’re not obligated to share details. Privacy can help you avoid unwanted pressure and rushed decisions.
Want help sorting through your options?
If you’re in the Pittsburgh area and you’d like a second opinion before you make big decisions, you can schedule a meeting here:
Schedule a meeting:Contos Pikras Wealth Advisors
This article is for informational purposes only and is not tax or legal advice. Investing involves risk, including the potential loss of principal. Consider working with qualified tax and legal professionals regarding your situation.