Got an inheritance? Don't do THIS...

A friend revealed to me that her mother, age 62, is in dire financial shape two years after the death of her successful husband.   I'm shocked, I never thought it would happen.   The problem is that Mom didn't have a plan to manage her money and the kids didn't want to hurt her feelings and butt in when they realized she was depressed and spending too much.   The reality is hard to understand - Mom went through $600,000 in a little over two years.   More than a half a million dollars in 24 months.   It's a shame because, if managed well, Mom could have lived comfortably for the rest of her life.  Now Mom's renting an apartment and selling off her antiques.  Her large home is for sale.  She's living on a meager social security payment - her husband died before he began to collect social security so she's collecting earlier than she might if he'd lived.  It's nice that the funds are available but the payments would be more if she'd waited to collect later in life.

Here's WHAT to do if you get an inheritance:  I write this for people over 55-60 - those who are faced with living on a limited income.  The idea is to create stable living conditions, minimizing costs overall so that living on a limited income is manageable and doesn't cause hardship.

Seek advice from a banker or financial professional. There are plenty of funds where you can put money that will generate interest or receive dividends even if the annual payoff is low.  It might not be as much as riskier investments but it's steady and you won't risk the principle or bulk of your money.  Think if it as a source of long-term annual income:  Let it sit in a special fund and at the end of a year 1 , you could have 20-30-40,000 to spend during year 2 while your nest egg sits and grows money for year 3.  (I've discussed this scenario with representatives from Edward Jones Financial, but any reputable financial firm should be able to help.)
Seek to make the money LAST - don't go on spending sprees. Don't do a bunch of cosmetic work on your home to make it look prettier. 
Seek emotional counsel if you have the urge to buy and buy and buy - this is a sign of depression.  I believe we get a little spike in endorphines when we spend money - this feels good so we do it a lot when we're depressed.   This is RISKY - try to resist the urge to shop; if possible avoid the mall, don't watch shopping channels and don't splurge.
Consider setting up a trust or annuity for yourself - this will ensure that someone doles the money to you over time.
Invest in things that will make your life more stable:  Pay off credit cards then CUT THEM UP. Pay off your house and make repairs that will ensure it's in good shape for the long term. Note that I said REPAIRS not improvements  - only make improvements if it make it safer or will increase the selling price.
Buy or pay off a quality car that will last you a good long time - consider a brand that will require minimal repairs and will last miles and miles.  Be sure it's a size that you'll be SAFE driving - think automatic transmission, 4 door-sedan not oversized SUV with 4-on the floor!

What NOT to do:

Don't go on vacation after vacation without consulting a financial adviser. Understand if you can AFFORD a lot of travel.  Spend it on travel ONLY after you've made arrangements for the long term.
DO NOT LOAN money to kids, grand kids or friends. Often people have every intention of paying money back but when all you have is one big chuck of money, it's value is in the potential it has to earn more. Don't whittle it away a few thousand dollar loans at a time; before you know it, the funds are gone and collecting those loans is probably impossible.
Don't make a lot of cosmetic changes to your home - unless you'll sell soon and you are SURE it will pay off big!  Example:  if your living room is painted dark brown, it might be wise to paint the walls a neutral color before showing it for sale - the brown color will make the room look smaller and won't suit everyone's tastes.
 Don't buy a lot of flashy gifts.  you don't have to buy off family or friends, they should WANT your long term financial security not a bunch of "stuff". 

What should I do with dads life insurance? what should I do with my  inheritance?