Navigating Windfalls: What to Do When You Receive a Large Inheritance or Bonus

Hit the Pause Button (Yes, Really)

First things first—breathe. Don’t rush out to buy a new house or book a first-class trip around the world. Give yourself time to emotionally and mentally process the event.



This is especially important with inheritances. They often come with grief and emotional weight. You’re not just managing money—you’re managing loss.

Create space to think clearly. Park the funds in a high-yield savings account or money market fund temporarily. This gives you time to plan instead of react.

Understand the Type of Windfall

Not all windfalls are created equal. Some come with strings attached. Understanding what you received—and how it’s taxed—is step one.

Here are a few common types:

• Inheritance: Typically not taxed as income at the federal level, but estate taxes or state inheritance taxes may apply. Different rules apply to IRAs, Roth IRAs, or real estate.
• Bonus or work-related windfall: This will likely be taxed as regular income and could bump you into a higher tax bracket.
• Stock options or equity payouts: May have capital gains implications depending on when and how they’re exercised.



Consult with a CPA or advisor to avoid surprises come tax season.

Settle Debts Strategically

If you’re carrying high-interest debt—like credit cards—it’s often wise to pay those off first. The guaranteed return of eliminating 20% interest is hard to beat.



But don’t feel pressured to wipe out low-interest debt (like a mortgage) right away. You might earn more investing that money elsewhere.

One of our clients inherited $400,000. She considered paying off her home loan, but after reviewing the low 2.75% rate, we helped her build an investment plan instead—growing the funds while still making manageable mortgage payments.

Revisit—or Build—Your Financial Plan

A windfall can radically shift your trajectory. Maybe you were saving to buy a home in 10 years—now it’s possible in three. Maybe retirement felt distant—now it’s within reach.



Your financial plan needs a refresh. Consider:

• Emergency fund: Ensure you have 6–12 months of living expenses set aside.
• Short-term goals: Home, car, education, travel—what’s now realistic?
• Long-term goals: Retirement, generational wealth, charitable giving
• Insurance and estate needs: Do you need more protection now? Are your documents up to date?

We like to say: don’t just upgrade your lifestyle—upgrade your plan.

Invest with Purpose

When you’re sitting on a pile of cash, the urge to do “something” with it can be overwhelming. That’s where a well-thought-out investment strategy comes in.



Start by assessing:

• Time horizon: When will you need this money?
• Risk tolerance: How comfortable are you with market ups and downs?
• Tax implications: Should you use tax-advantaged accounts? Municipal bonds?

Then build a diversified portfolio. Don’t chase hot stocks or pour everything into one asset class. A balanced, diversified plan keeps your windfall working for you over time.

Consider Gifting and Philanthropy

If your windfall feels like more than you need—or you want to honor the memory of someone who passed—charitable giving can be incredibly meaningful.



You could:

• Make direct donations to causes you care about
• Set up a Donor-Advised Fund (DAF) to manage charitable giving over time
• Gift to family within the annual IRS limits (currently $17,000 per recipient per year)

We worked with a couple who used part of their inheritance to endow a scholarship at their alma mater. It wasn’t just a financial decision—it was a legacy one.

Don’t Forget Estate Planning

Your own estate may now look very different than it did before. Make sure your legal documents reflect your new reality:

• Update your will or trust
• Review beneficiaries on retirement accounts and insurance
• Consider setting up a trust if you want more control over how your assets are used or passed on



These updates help protect what you’ve received—and ensure it benefits the people and causes that matter to you.

Avoid Lifestyle Creep

It’s tempting to make big life upgrades when a windfall hits. And yes, some enjoyment is totally fair. Buy the car. Take the trip. Celebrate.

But be careful of letting new habits become permanent. That $10,000 vacation is a one-time splurge—but a bigger house with a higher mortgage, taxes, and maintenance costs? That’s a forever expense.



Keep lifestyle upgrades intentional, not automatic.

Final Thoughts

Receiving a large inheritance or bonus can be life-changing. But the real magic isn’t in the windfall—it’s in what you do next.

With a little breathing room, thoughtful planning, and the right support, you can turn unexpected wealth into long-term opportunity. Not just for yourself—but for your family, your future, and your legacy.



Aligned Wealth Advisors helps clients navigate windfalls with confidence and clarity. Whether you’re celebrating a major bonus or honoring a loved one’s gift, we’ll help you make the most of it.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).