Old Money University – Lesson Two: How to handle an inheritance

JFK Jr. and JFK.

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Heir Apparently You

The stats: about 66% of Americans are going to receive an inheritance from their parents or have already received one. The average amount of that inheritance is about $46,000.

If you’re over the age of 21, your parents have probably already discussed this subject with you. If you’re over the age of 55, you’ve probably already planned what you’re going to leave your children, more or less.

What is less likely to be known or discussed is an inheritance you might receive from a grandparent, aunt, uncle, cousin, or family friend. These windfalls can come out of nowhere and may not be handled as well as they could be.

I’ll tell  you why.

When a family member dies, there is usually a lot of emotion. And emotion is the enemy of good financial decisions.

Decide Now

So here’s my simple, time-tested, good-as-gold advice.

First, decide how you’re going to handle an inheritance before you receive it. Not, you know, the day before the reading of the will. I mean decide now, today, how you’re going to behave with the money.

Second, read (or reread) the introduction to The Old Money Book. This is where I contrast how two different people handle an inheritance: one badly, one well.

If you can’t bring yourself to do that, and you want my current, 2026, advice that you can run with, right here, right now, I’ll give it to you.

The Other One Percent

Take one percent (1%) of your total inheritance and spend it like a drunk sailor on shore leave. Buy those shoes you always lusted for. Buy that watch you’ve been dying for. Party like there’s no tomorrow. Take that luxury cruise. Whatever you can do on 1%. If you’ve inherited $100,000, then you get a grand to throw away. If you’e inherited a million, you get $10,000.

Watch how fast it goes. Notice how good it feels. Notice the feeling when you spend the money. Then notice the feeling a week or a month after you’ve spent the money. These are often two different feelings: euphoria and the let down.

Sit On It

Second, don’t touch the other 99% for six months. Keep a journal of all the things you think you’d like to buy or do with your windfall. See how your ideas change over time. See if you feel like you’ve dodged a bullet with some now-obvious bad ideas.

And know that I don’t speak to you from some “trust fund on high.” I blew my first inheritance in 72 hours. Not a typo, just a very good party. And when it was all gone, let’s just say it was very sobering, in more ways than one.

I have, luckily, worked hard, married well, become wise, saved money, and inherited more money since then. And I have managed it well because I’ve seen how fast it can go.

The main strategy that my wife and I have used with regards to windfalls of cash is to simply not do anything for a period of time, like, you know, six months. 

Let the emotions settle. Make a list of options: should I invest it? (Maybe.) Should I just hold the cash? (Possibly.) Should I get tax advice? (Probably.) Is there a luxury that I’ve always wanted that I can now buy without impacting the overall inheritance? (Maybe.) Is there an opportunity that I can take advantage of, like education, that will make the most of this blessing? (Perhaps.)

Other Aspects of a Windfall…

Should I quit my job? (Probably not.) Should I start my own business? (Maybe.)

Are people asking me for money? (If you were foolish enough to tell them you inherited money.) Would I give (or loan) them the money if I hadn’t received this inheritance? (Proably not.) Would I be okay if they didn’t pay me back? (Probably not.)

You’ll have a million questions running around in your head when you inherit anything substantial, and that’s fine. Let ’em run. You don’t have to chase them. You just have to be patient and let them exhaust themselves.

Then, when the healthiest ones are out of breath, but still standing in front of you, you can ask them to explain themselves. They will most likely go by the names of Savings, Investment, and Opportunity.

One tiny bit of valuable advice, as if I wasn’t offering enough: don’t change the way you dress immediately after a windfall. It makes people to curious at just the time you want them to suspect nothing. Buy new clothes slowly, later, preferably after speaking with me. Waha.

How this helps you: as I said, a surprising number of people will receive an inheritance at some point in their life. Maybe you. How you handle it will be critical: is it a windfall of cash that you spend? Or is it an opportunity to change your life? 

Pearl of wisdom: to be aware of something that might happen to you in the future is the first step to being prepared and making a good decision. 

That’s it for Lesson Two.

Lesson Three is a topic we’ve touched on frequently, but one that still needs to be remembered, and practiced.

Until then…

Contributor

Byron Tully (right)

Grandson of a newspaper publisher and son of an oil industry executive, Byron Tully is an author who also writes for the entertainment industry. His nonfiction debut, "The Old Money Book," was published in April of 2013 to excellent reviews and enjoys consistently strong sales worldwide. His other works include "The Old Money Guide To Marriage", "Old Money, New Woman: How To Manage Your Money and Your Life", and "Old Money Style - The Gentleman's Edition".

Byron regularly contributes to its blog, www.theoldmoneybook.com, which has been visited by over 1 million readers since 2014.

In February of 2020, "Old Money Style - The Gentleman's Edition" was published by Acorn Street Press. This fourth book in the Old Money series reveals the fundamentals of dressing well in a classic and timeless style. In November of 2020, Byron published a 2nd Edition of "The Old Money Book", which expands on his original classic. This 2nd Edition includes vital information and insights for readers as they navigate a very different, post-pandemic world.

Byron speaks frequently about the culture and values of Old Money. He has been interviewed by KABC New York's Financial Quarterback Show, The Huffington Post, and The Simple Dollar, among others.

He lives in Paris and is happily married to an Old Money Gal from Boston.