How to Make Your Inheritance Last: Smart Tips for Protecting Your Legacy

Guidance from a Birmingham, Alabama estate planning law firm.

Inheriting money or property can be a life-changing experience—but without a plan, your inheritance could disappear faster than you expect. According to a study from Ohio State University, most Americans save only about half of their inheritance. The rest is often spent, donated, or lost.

At Provident Law / Estate Planning LLC, we make estate planning easy, helping families in Alabama and Florida protect their legacies for generations to come. If you want to make your inheritance last, thoughtful steps and legal guidance can help you manage, protect, and grow your assets wisely.

Why Making Your Inheritance Last Matters

Rising living costs, inflation, taxes, and unexpected expenses all chip away at even the most generous inheritance. Without proper planning, it is easy for wealth to be depleted within a few years. That is where estate planning attorneys and financial advisors can help you create a plan to preserve your inheritance and secure your future.

1. Understand Your Inheritance Fully

Before making any financial moves, take inventory of what you have inherited. This may include:

• Real estate

• Investment accounts (stocks, bonds, mutual funds)

• Retirement accounts (IRAs, 401(k)s)

• Business interests

• Cash and personal valuables

  
  

Work with an estate planning attorney, financial advisor, and accountant to understand your legal obligations, financial options, and tax consequences. For example, inherited retirement accounts may have required minimum distributions (RMDs), and income-generating assets may create tax liabilities.

2. Avoid Rash Financial Decisions

It is tempting to spend or give away your inheritance quickly, but it is best to pause. While developing your long-term financial strategy, consider:

• Keeping funds safe in insured savings accounts, money market accounts, or CDs (FDIC-insured up to $250,000 per depositor).

• Creating or expanding an emergency fund to cover at least three to six months of living expenses.

• Deciding how to title the funds—especially if you are married. You may want to title the property with another person as part of your estate plan. There are pros and cons to this, so it is always a good idea to consult a lawyer before taking any action.

• Understanding tax consequences of gifts if you want to share your inheritance with children or others. Improper gifting could trigger gift taxes or other financial consequences.

• Using part of the inheritance to pay down debt if you carry high-interest liabilities. Reducing debt may improve your long-term financial health.

  
  

3. Build a Budget and Financial Plan

Without a clear plan, even a large inheritance can be depleted. Work with a trusted financial advisor to:

• Cover immediate needs like debt payments or housing

• Save for long-term goals like education or retirement

• Fund an emergency reserve

  
  

Still working? Maximize your retirement savings. Experts recommend saving one year’s salary by age 30, three times your salary by 40, six times by 50, eight times by 60, and ten times by 67. If your employer offers a 401(k) match, contribute at least enough to get the full match. If not, consider opening an IRA.

Note: Withdrawals from an inherited traditional IRA count as taxable income—consult a tax professional for guidance.

4. Consider Creating a Trust

If you want to protect your inheritance or pass it on to others, consider setting up a revocable living trust or irrevocable trust. Trusts can:

• Shield your assets from creditors, divorce, or lawsuits

• Avoid probate delays and court involvement

• Reduce estate taxes

• Control how and when assets are distributed to beneficiaries

  
  

An estate planning lawyer can help you decide which type of trust best fits your needs.

5. Plan for Taxes and Legal Exposure

Estate, inheritance, and income taxes can all erode your inheritance. That is why you need legal and financial guidance to help minimize your tax liability through:

• Tax-efficient withdrawal strategies

• Use of trusts and gifting strategies

• Deductions and exemptions

  
  

If you have inherited business interests or rental properties, protecting those assets from lawsuits or creditors should also be a priority.

6. Grow Your Inheritance with Smart Investing

To make your inheritance last, you need to grow it responsibly. Avoid impulsive investments or “get-rich-quick” schemes. Instead:

• Diversify your portfolio across real estate, stocks, bonds, and other assets

• Rebalance your investments as your goals evolve

• Consult a financial advisor who understands wealth preservation

  
  

7. Build a Team of Advisors

Preserving an inheritance is not a solo mission. You need an experienced team:

• A financial advisor to manage your investments, retirement planning, and major purchases

• A tax professional to optimize your income and minimize taxes

• An estate planning attorney to draft or revise your will, trust, medical directives, and powers of attorney

• An insurance specialist to evaluate your life, liability, and long-term care coverage needs

  
  

At Provident Law / Estate Planning LLC, we work closely with your other professionals to create a coordinated, customized plan.

Your Next Step

An inheritance is a meaningful gift—and one that deserves careful planning. With the right legal and financial strategy, you can turn your inheritance into a lasting legacy.

If you have received an inheritance, we invite you to contact our team at Provident Law / Estate Planning LLC. We are committed to making estate planning easy and will guide you through the process, ensuring your plan is tailored to your unique needs and goals. Whether you are creating a will, establishing a trust, planning for incapacity, or reviewing existing documents, we are here to provide the personalized guidance you need. Reach out today to schedule a consultation and take the next step to give your family peace of mind.

About the Author

Colin McMichen is an experienced attorney and the founder of Provident Law / Estate Planning LLC, a Birmingham, Alabama based firm. With a focus on estate planning and probate law, Colin is dedicated to helping individuals and families make estate planning easy.