Sadly, I have had to help a number of clients through inheritance issues lately. Dealing with the emotional issues are hard enough; add on a sudden lump sum of money and some people become paralyzed. Where do you start and what do you need to do first?

Does the estate have any unpaid bills or owe Estate Tax? These are the first issues that need to be taken care of. After that, you now have to decide what to do with the money.

There are two schools of thought on the next move; do you splurge a little or not? I feel that if there is that one small item or vacation that you always wanted – go for it. Your loved one would be happy that they could provide a bit of happy during a sad time. The other school is save first, then splurge. Really, you can do both.

An emergency fund is a great place to start. Make sure you have enough liquid cash to get you through 6 months of expenses, and then plan the splurge. If you do not have a retirement plan, fund that too. Do you have kids that want to go to college? A 529 college savings plan can be funded with the inheritance.

Sudden wealth can be overwhelming, but don’t count your chickens before they hatch. Many people who inherit do not receive as much as they had thought they might get. Planning on an inheritance is not a retirement plan either. Be grateful for anything that you might receive and try to use it in a manner that would make the grantor of this gift proud.