A researcher at Ohio State University found that Americans who receive an inheritance save about half of it and spend, donate or lose the rest. However, almost 30% of Americans who receive the inheritance had negative savings rate within 2 years of receiving the inheritance, meaning that they spent it all.

There are strong similarities in these spending habits with people who receive lottery winnings. Apparently, lottery winners save only 16 cents of every dollar won and have dramatically higher bankruptcy rates within 5 years after winning.

Of course, the inheritance that people receive may not be a large amount of money. The median inheritance for the past 30 years was $11,340. For those people who inherit $100,000 or more, the percentage of people who spent it all within two years dropped to 19%.

If you receive an inheritance (or a lottery winning) – be careful. I’ve seen bad financial advisors who have only their own interests at heart. I’ve also seen bad “friends” who convince unsophisticated people to invest in their ‘brilliant’ business schemes. There is no perfect answer about what to do with the money. But not spending it immediately would probably be the best advice!


Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship. ATTORNEY ADVERTISING