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What you should know if you're receiving an inheritance

You've learned that you are inheriting money from a family member or someone else you were close to who passed away. This often brings a mixture of emotions. You're sorry that they're gone, but you're pleased that they included you in their estate plan.

Whether you were expecting the inheritance or it's a complete surprise, it's essential to fully understand any terms that come with it. It's also important -- particularly if it's a substantial amount -- to get some professional financial, investment and/or tax advice in addition to any legal advice you might need.

According to one financial planner, "80 percent of all inheritances are spent within 10 years." If you've inherited a significant amount of money, it can last much longer than that if it's invested and spent wisely.

It's a good idea to read the document that details the inheritance. There may be restrictions on it -- particularly if it's a trust. For example, some people will leave money to their children with the caveat that it must be used to pay for education or job training. Sometimes, people will add a provision to their will so that their beneficiaries won't receive their inheritance until they reach a certain age.

Often, inheritances are designated to be paid in installments. You might receive a specific amount or percentage every year, for example, instead of in one lump sum.

Texas, unlike some states, doesn't have an inheritance or estate tax. However, if you live in one of the states that has one or both of these taxes, you should find out what your tax obligations may be.

If you have questions about your inheritance, the executor of the estate or the trustee of the trust should be able to help you. If you have concerns about how the inheritance is being distributed or questions that those in charge of the estate can't answer, it may be wise to consult with the attorney for the estate or your own estate planning attorney.

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