I’m back with my second “Confessions of a Financial Planner” series to talk about how I felt guilty about an inheritance I received from my dad.
If you missed the first one, you can read Confessions of a Financial Planner: I’ve Held “Too Much” Cash.
As a financial planner and as someone who has helped many people work through receiving an inheritance, I was surprised by how I felt after receiving an inheritance. I can’t count the number of times clients have received an inheritance because it’s been so many. I figured I’d be emotionally prepared for an inheritance because I’ve worked through them with other people, but I still wasn’t prepared for how I would feel.
Money is inherently emotional — even more when it’s “unearned” and received suddenly.
I’m going to explore how I felt about the inheritance, what I did with it, how I splurged and wasted a bit, and the time frame for deciding what to do with it.
The Confession of a Financial Planner: I Felt Guilty About An Inheritance
My confession is that I felt guilty receiving an inheritance when my dad died.
I’m not alone in feeling guilty about an inheritance.
I know that may seem like a strange confession, but when you’ve worked around money for over a decade, helped people process their emotions around receiving an inheritance, and provided guidance about what to do with an inheritance, it feels like I should have had it more “together.”
I felt like it should have been easy. I should have known exactly what to do with it, went through the steps, and moved on without much emotion.
You may be thinking, “How much did you receive?” If it was a life-changing amount of money, maybe that’s why you felt uncomfortable.
Nope.
Earlier in my career, it may have been, but at this stage in life, it didn’t change my quality of life in any way.
The inheritance felt…dirty and unwarranted. I felt unprepared even though I knew it was a possibility I might receive an inheritance.
Reasons/Excuses of Why I Feel Guilty About An Inheritance
Why do I feel guilty? I still can’t put my finger on exactly why I feel guilty about the inheritance, but I have a few thoughts.
I Didn’t Earn the Inheritance
Money feels different when it’s earned versus received, whether that’s through an inheritance, lottery, or other sudden windfall.
I’ve seen this throughout my career. People who have worked for their money tend to treat money differently and have a better relationship to it than people who didn’t.
Don’t get me wrong. Money randomly showing up one day can be a blessing. It can change lives, provide access to healthcare, provide new business opportunities, allow people access to better education, and more. But, there can often be guilt associated with the money.
Questions often start circling in people’s minds:
- Why me and not another person?
- What did I do to deserve it?
- How can I make the most of it?
- How can I steward this money well?
- How much should I give away?
When it’s money that you earn, usually there are fewer questions. In my case, I didn’t earn the inheritance and to complicate it further, neither did my dad.
This was money from real estate that was put into a trust for my dad’s benefit when his parents died and sold a few years before he died because he ran out of money. My dad never really had stable employment or income, and he was living off these proceeds.
This was money my grandparents had earned, one of whom I never met, and one who I saw about once a year until high school when she died.
I knew all of this about the money before it became an inheritance, which means it wasn’t a surprise, but once it’s actually in your bank account and your loved one is dead, it hits differently.
My Mom and I Criticized My Dad’s Spending
This is one of those that still hurts to this day.
My dad was diagnosed with Stage IV Lung Cancer and miraculously survived for over seven years. The man was stubborn and refused to die. That made it hard to plan financially.
In the last few years of my dad’s life, we knew he had enough money to privately pay for two years in a decent living facility and then potentially spend down his assets to qualify for a Medicaid bed in the same location.
We thought this was important because many of the Medicaid-only facilities were not as nice and moving while sick and potentially dying sounds awful. Why put someone through that?
This meant that my mom and I were hyper cognizant of how my dad was spending his money because we wanted him to have enough to afford those two years.
Looking back, some of the criticism was warranted. Some wasn’t. You could argue none of it was because it was his money, but I’d also argue he wasn’t in the right state of mind and wouldn’t have spent that way during normal times.
For example, thousands of dollars a week on illicit drugs — I’m okay criticizing it to this day. My dad found a way to get sober when I was kid and as far as I know, stayed sober until the last few years of his life when he struggled with pain medication addiction and a healthcare system that failed him.
Thousands of dollars a month on Uber Eats — I feel somewhat bad about this one now. I criticized and watched my dad’s spending on fast food and Starbucks. My dad had access to food already. This was directly taking away from his ability to private pay for two years. Every three months or so of spending on Uber Eats was one less month he could privately pay for a better living facility.
When I received the inheritance, I thought about how many more times my dad could have had Uber Eats and enjoyed his meals in the last year of his life.
I’m not sure my dad actually adjusted his spending in any way based on the criticism, but the fact that he might have, and that meant I received more of an inheritance comes with guilt.
The Inheritance Came Suddenly
Another reason the inheritance was uncomfortable is because it came suddenly. I knew once my dad was sick that I’d likely receive some form of an inheritance, but as he kept living, it became less clear.
In fact, in the last few years of his life, my estimates were somewhere between helping my dad out financially because he ran out of money or receiving an inheritance.
When my dad finally had to be moved to an adult family home and he went on hospice, we still thought he had quite a bit of time left. Even hospice wouldn’t allow him access to all of their services because it was “for people who are closer to death.” (I’m still upset they withheld services.)
About a week after he went on hospice, he died.
The death part felt quick even though the sickness journey felt like multiple lifetimes.
One day he is alive. The next he is dead. A few weeks later, I have an inheritance.
Due to the simplicity of my dad’s estate, we set up a transfer on death designation on his bank account, which meant claiming the money was as simple as a phone call and a death certificate. This isn’t always the best route, but in our case, it made sense. Always consult your estate planning attorney.
For other people, it may take 9 to 12 months to receive an inheritance, so you have more time to anticipate and process it. For me, I suddenly had money that wasn’t mine a few days before.
The Inheritance Was Associated With Painful Memories
Lastly, the inheritance was uncomfortable because it was associated with painful memories.
Below is a short list:
- Needing to file multiple Adult Protective Services reports on my dad for his self-neglect and the system doing absolutely nothing to protect him.
- His multiple-month hospital stay that I call “Hotel Providence” and how we had to fight the social workers to come up with a safe discharge plan while they tried to put the work on us.
- Multiple episodes of delirium.
- Make special arrangements for my dad to come to my wedding and my dad chose not to come.
- My dad getting kicked out of assisted living less than 48 hours after moving in after I flew home to help and my mom arranged for friends to help move.
- My dad having a seizure. To this day, it’s still one of the most jarring things I’ve witnessed.
There are many more painful memories, but this gives you an idea of what we went through. The money isn’t directly tied to any of these memories, but when I think about the money, I think about the long seven years we spent looking after my dad trying to keep him healthy and safe.
I think about the inheritance less now, but at first, each dollar seemed to tie back to a difficult memory of our time together.
What Did I Do With The Inheritance?
After I moved the money from my dad’s account into my bank account, I let it sit there for a few days and moved it into my brokerage account. I didn’t want to think about it anymore.
It was almost like an “out of sight, out of mind” situation. If I quickly combined it with other funds, it wouldn’t be separate, and I wouldn’t associate the money with him or an inheritance.
As I wrote in my first Confessions of a Financial Planner, I had enough cash on hand to cover everything I anticipated needing for the next few years.
My car was only a few years old. It didn’t make sense to pay off my mortgage because the rate is below 3%, and I could earn more money even keeping it in a bank savings account. There wasn’t anything we needed to take care of with the cash.
I decided to invest most of it for our future selves. It could be for retirement, a sabbatical for my wife, a future car, unexpected house expenses, or something else we haven’t thought of.
I invested all of it, except about $1,500.
My mom encouraged me from a young age to take a small amount of any inheritance and treat yourself. She told me this when my grandma died, and I used part of the funds to buy a lens for a camera.
The $1,500 I spent on kitchen equipment, most of it kitchen knives. My dad was a good cook, and although we butted heads in the kitchen, it’s one of the places I feel closest to him — even to this day.
He taught me how to make hashbrowns from scratch, brisket, crepes, and many other delicious meals. The kitchen knives were a way to honor him, make cooking more enjoyable, and open our kitchen to more friends and family.
My dad never believed in cooking the right amount of food for the number of people he was hosting. He almost always cooked double what was needed. It made it easy to add an extra person at the last minute or send people home with leftovers, which he regularly did.
It rubbed off on me.
Did I need every knife I bought? No, of course not. Looking back, there are a few knives I hardly ever use.
I rarely pick up the serrated citrus knife. One of the knives ended up not being very good. I use the Chinese chef’s knife on an almost weekly basis.
But, any time I make a brisket, I always break out the razor sharp 10 inch slicing knife and think of him.
Do I Regret What I Did With the Inheritance?
No, and I followed the advice I often give.
When working with people, I’ve found a majority of people want to treat an inheritance separately. They often put it in a separate bank or investment account. There is nothing wrong with that, and if that is what you decide to do, that’s okay.
I don’t prefer keeping it separate because people treat the money differently. They spend it differently. They look at it as a bonus. They invest it differently. They may not sell an investment because their loved one owned it. Or they may not want to make changes because that’s how it was set up previously, even if it is no longer aligned for their ideal life now.
It’s okay to do this in small doses (I did!), but when it’s a large portion of your net worth, it ranges from not ideal to downright risky.
When you receive your inheritance, it’s your money. It’s no different than any other money in your accounts. The question to ask yourself is, “If I earned X amount of money today, is this how I would have invested, saved, or spent it?”
I like that the money was combined into my brokerage account. I have no idea how much money is attributable to the inheritance. I can’t view it differently, and I’m more easily able to make decisions about what to do with it that is based on how I want to live my ideal life. If I had kept it separately, I’m not confident that I would not have treated it differently.
The kitchen knives can be traced back, but for the most part, those are good memories and something for which I’m grateful.
What Are Options to Consider When Receiving an Inheritance?
If you received an inheritance recently or plan on receiving one in the future, it’s a worthwhile exercise to consider what you would do with it. Below are options I commonly see people discuss. You can also do a little of each.
Pay Off Debt
One of the first things that comes to mind about what to do with an inheritance is to pay off debt.
For the most part, I like this option.
I’ve seen people pay off mortgages, home equity lines of credit, student loans, credit card debt, and other liabilities.
My one word of caution is that using most of your inheritance to pay off debt may not be the best use of the money. For example, if your mortgage rate is extremely low, you may want to think twice before paying off your mortgage if that means having less money accessible for home improvements and repairs. I’ve seen people pay off debt, tie up most of their money in their house, and then feel constrained when they could have invested the inheritance and used that to help pay the mortgage each month.
Any debt with a high rate of interest often makes sense to pay off with an inheritance. That feeling of being debt free can help remove a weight off your shoulders.
Splurge On Something
I really appreciate when people splurge on something with their inheritance. If you are financially secure enough, go spend on the thing you’d never spend with your own money.
Buy that business class plane ticket, offer to pay for a trip for a friend or family member, donate extra to charity (potentially in their honor), hire someone for that home improvement project, or take the trip you’ve been dreaming of.
Do you want your inheritance to become someone else’s inheritance? Or is there some way that inheritance can bring you joy?
Take a Sabbatical
I love when people figure out they have “enough.”
They may not have “enough” to be financially independent, but they have enough to take time before they decide what comes next.
I’ve never taken a sabbatical, and it’s one of the few regrets I have. I left my prior firm and started working on Kindness Financial Planning shortly after. I enjoyed a cross country road trip for a few weeks, but even during that time, I was working on the business.
Looking back, I wish I had taken a few months to be without work.
I’ve seen first hand how powerful, life changing, and relaxing sabbaticals can be. I’ve never known anybody to regret taking one.
Using an inheritance to take a sabbatical can be a rewarding experience.
Invest for Your Future
One of the other common options for an inheritance is to invest it for your future. This may be using the money to maximize your retirement accounts or investing it into a brokerage account that gives you more flexibility.
This isn’t the fun option, but your future self will probably thank you.
Final Thoughts – My Question for You
I was surprised by how unprepared I felt receiving an inheritance from my dad.
Looking back, I handled it fine, but it felt uncomfortable. I wanted to make a decision about it, and move on as quickly as possible. The money felt stained with hard memories.
I’m glad I splurged on buying good kitchen knives, and I feel more secure knowing I invested most of it for my future.
I’ll leave you with one question to act on.
How do you think you would spend an inheritance?