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What's the best way to spend your inheritance?

Whether you knew it was coming or you are surprised by a sudden windfall, you may wonder how best to spend your inheritance. Many people use the unplanned money to splurge on items they've always wanted or fund a family vacation, but here are four tips for spending your inheritance wisely and making it last as long as possible.

First, always make sure you have the money before you spend it. Some people jump on the news that they are inheriting assets and spend the money before they receive it. Since probate processes don't always go as planned, they might be surprised when they don't receive the money -- or all of the assets expected -- after all. This is a quintessential case of chickens and eggs; don't count them before they hatch if you want to avoid unpleasant surprises. If probate matters get complicated, make sure you have an estate law professional on your side.

Create a priority list and know that you can't buy everything. That's true for most people who inherit; unless you are the heir to a vast financial empire, you probably won't be able to buy everything you ever wanted. Prioritize your wishes or the needs of your family and meet the top needs first before saving assets for a rainy day.

Many financial experts urge heirs to follow the 10 percent rule. That means that you spend no more than 10 percent of your inheritance right away; the other 90 percent, you invest. This way, your inheritance grows and continues to provide for you in the future.

Finally, understand the ongoing costs of any purchase. Buying an expensive car or home costs more than the initial purchase. If you spend your entire inheritance on one of these things, you might not have enough left to cover taxes, fees and future maintenance costs.

Source: CBS News, "6 tips to spend your inheritance," Robert Pagliarini, accessed March 03, 2017

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