Receiving an inheritance can be an unexpected windfall, and it can be tempting to burn right through money received in this manner.

Before spending that money though, you should think it through and learn how to best use it to reach your financial goals. The best thing you can do is step back and wait before spending it so that you don’t spend it foolishly.

Here are some common financial goals that can be helped by an inheritance.

1. Pay off debt
2. Emergency fund
3. Downpayment for home
4. Retirement savings
5. College savings

You should plan and rank your personal financial goals. There are also some terms you should become familiar with such as:

1. Beneficiary;
2. Estate tax;
3. Executor;
4. Grantor;
5. Heir;
6. Inheritance tax; and
7. Real vs. personal property.

There are different types of inheritances. Some common ones are cash retirement accounts and houses or other property. If the inheritance is sizable, you should consult with a financial advisor/planner or CPA, a tax professional or tax lawyer, and/or an estate planning lawyer or professional.

There are plenty of investment options that merit consideration like bank accounts, real estate, stocks and index funds if you don’t already have a financial goal in mind.

To learn more about inheritance types, terms and options, read the full article What to do With an Inheritance, on Fool.com.

Credit to:
The Motley Fool / Fool.com
What to do With an Inheritance