NEW YORK (MainStreet) -- There's a new maxim among financial professionals on U.S. adults and family inheritances that goes something like this: "If you get rich suddenly - don't get poor gradually."

Yes, receiving an inheritance is one of several ways to get rich suddenly - but the experience can also be a great way to squander your money and end up poor, financial experts say.

"Almost anyone who gets a large windfall can fall prey to 'sudden wealth syndrome,'" says Shomari Hearn, certified financial planner and vice president of Palisades Hudson Financial Group, in Fort Lauderdale, Fla. "The recipient can fall into the trap of believing their newfound wealth will never run out and they can buy everything and do anything."

There is no shortage of Americans who do exactly that. According to a 2012 study from Ohio State University, adults who receive an inheritance save only about half of what they receive, while spending, donating or losing the rest.

Financial experts say that, despite their aggressive tone on preserving inheritance assets, recipients go off and spend the money, anyway.

"I've never been lucky enough to get an inheritance, but I have suggested this to folks who have received one, and have trouble dealing with the windfall," says Holly Wolf, chief marketing officer at Conestoga Bank in Chester Springs, Pa. Recently, a relative of Wolf's received got a large inheritance - $750,000.

To make the money last, Wolf recommended the family member buy certificates of deposit that are 'staggered.' That includes a one-year, 18-month, two-year, three-year, four-year, five-year and ten-year CD. "I advised putting $75,000 in each CD and to keep renewing them," she says. "Instead, they took a good portion of the inheritance and spent it on home improvements and cars, but investing in CDs would keep the money away from them."

"Sure they aren't earning a huge interest rate, but they are earning something and more importantly they won't spend it," Wolf adds.

Unfortunately, less than two years later, the husband in that couple passed away and the new car was repossessed and the wife had to sell the home. "There was no money - they burned through the inheritance," she says. "Had they done what I had advised, she would have had $525,000 remaining to live on for the rest of her life."

To avoid making a big mistake with an inheritance, Hearn advises getting some professional help before anyone cuts you an inheritance check, no matter how you feel about spending versus saving. "Have a plan and a budget so you'll know what you can and can't afford," Hearn says. "And hire qualified advisors to help implement it. Plan before you make large purchases, not after." 

He advises assembling a team of financial professionals including a financial planner, a tax specialist, and a debt expert who can advise you on paying off on any bad debt first (such as credit card debt), using your inheritance cash. Then, reset your household budget to make sure your post-inheritance annual expenses don't exceed income unless you're retired.

"Even if you're retired, you'll still want to avoid invading principal too quickly and running out of money," Hearn adds.

Also, take immediate steps to keep your inheritance assets liquid (i.e., easy-to-access) and safe, says George Guerin, founder and president of Guerin Financial in Denver. "Losing a loved one can be a very emotional time, and the last thing you want to do is to allow your emotions to cloud your investment decisions," Guerin says. "Placing the assets in a money market account temporarily keeps your inheritance liquid and safe while buying you time to evaluate the situation carefully and make better decisions."

Additionally, make sure to match each new investment account to its source. "When you are ready to reinvest, take care to match each new account with its original source," Guerin adds. "For instance, assets coming from an existing IRA or 401(k) should be rolled into a new IRA. Stocks and bonds from a brokerage account should be rolled in to a new brokerage."

That protects against extra fees and charges and also maintains performance stability in each fund.

As Guerin notes, taking some time to exhale and collect your thoughts is a great way to avoid making any expensive, impulsive buying decisions with your windfall. "One of the best things a person can do when they come into a lump sum of money is to put the money in the bank and let it sit for 30 to 60 days," says Ryan Guinea, founder of the personal financial advisory website CashMoneyLife.com. "This gives the emotion of getting all that money in your hands time to settle so you can make a much better decision."


Making better decisions with an inheritance isn't easy, given the temptation to splurge with found money. But be smarter than that, and use the cash to help set up the rest of your life, and help with your kids' financial futures, too.

No new sailboat in the world will beat the satisfaction of doing that.