Feb. 10, 2025

What is the Best Way to Invest Inheritance Wisely?

Inheritance Incoming: Are You Ready?

Receiving an inheritance can be a blessing, often arriving during a time of grief¹. However, it also presents a significant financial responsibility. As Christians, we are called to be wise stewards of the resources God provides². This raises an important question: What is the Best Way to Invest Inheritance Wisely?

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Christian Perspectives on Inheritance

The Bible offers valuable insights into how we should view and manage wealth. Proverbs 13:22 tells us, "A good man leaves an inheritance to his children's children, but the sinner's wealth is laid up for the righteous." ³ This proverb highlights that righteous living positions us to bless future generations. However, it's important to remember that this is a general principle, and exceptions exist. Psalm 17:13-14 describes how the wicked often leave wealth to their children, potentially leading them to ruin³.

In the parable of the prodigal son, Jesus illustrates the tension between inheritance and forgiveness⁴. The younger son demands his inheritance early and squanders it on reckless living. Yet, when he returns home repentant, his father welcomes him with open arms and restores his position in the family. This story reminds us that God's grace extends even to those who have made poor financial choices. It also highlights the importance of reconciliation and forgiveness in the context of inheritance.

Furthermore, the Bible emphasizes the importance of stewardship². We are not ultimately owners of our possessions but merely caretakers of what God has entrusted to us. This perspective should shape our view of any inheritance we receive, reminding us to manage it responsibly and according to God's principles.

Seeking God's kingdom first is another crucial aspect of a Christian perspective on wealth⁵. Matthew 6:33 tells us to "seek first the kingdom of God and his righteousness, and all these things will be added to you." This means aligning our financial decisions, including those related to inheritance, with God's will and purposes.

Contentment is also a key biblical principle⁶. While it's not wrong to be prosperous, the pursuit of wealth for its own sake can be dangerous. 1 Timothy 6:10 warns that "the love of money is a root of all kinds of evils." Instead, we should cultivate contentment with what God has provided and focus on using our resources for His glory.

Finally, we must remember that our true treasure lies in heaven⁷. Matthew 6:19-21 encourages us to "store up treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also." This eternal perspective helps us keep earthly possessions, including inheritances, in their proper place.

Practical Tips for Managing an Inheritance Responsibly

When you receive an inheritance, it's essential to approach it with prayer and careful consideration. Here are some practical tips to help you manage it responsibly:

Don't rush into anything. Take time to grieve, assess your financial situation, and seek God's guidance before making any decisions¹.
Honor your loved one's legacy. As you consider what to do with your inheritance, remember where it came from. Think about the hard work and sacrifice that went into making it possible. Ask yourself: Will this decision honor my loved one's memory⁹?
Consider your personal values. Reflect on how your values and priorities influence your financial goals. This will help you make decisions that are aligned with your beliefs and bring true fulfillment¹⁰.
Pay off debt. Proverbs 22:7 warns, "The rich rule over the poor, and the borrower is slave to the lender." ⁸ Use a portion of your inheritance to eliminate high-interest debt, such as credit cards¹.
Build an emergency fund. Set aside 3-6 months of living expenses in a readily accessible account to provide a financial safety net⁹.
Invest wisely. Consider investing in a diversified portfolio of assets, such as stocks, bonds, and real estate¹¹. For example, you could allocate a portion of your inheritance to good growth stock mutual funds within a Roth IRA for tax-free growth⁹. If you have a larger inheritance, you might consider purchasing a rental property with cash⁹.
Save for the future. Maximize contributions to retirement accounts and consider saving for your children's education¹.
Be generous. Give a portion of your inheritance to your church or a charity that aligns with your values⁸.

Common Mistakes to Avoid

It's easy to make mistakes when handling an inheritance. Here are some common pitfalls to avoid:

Overspending: Avoid impulsive purchases and lifestyle inflation. Remember that material possessions are temporary¹².
Ignoring taxes: Understand the tax implications of your inheritance and plan accordingly¹².
Losing other income sources: If you rely on government benefits, be aware that receiving an inheritance could affect your eligibility¹².
Not saving enough: Don't get so caught up in immediate spending that you neglect long-term savings goals¹².
Not understanding the full scope of the inheritance: Be sure to understand any debts or liabilities associated with the inheritance¹³.
Failing to communicate: Have open and honest conversations with family members about inheritance matters to avoid misunderstandings and conflicts¹³.
Using the inheritance to pay off low-interest debt: While paying off debt is generally wise, consider the opportunity cost of using inheritance money for low-interest loans. You might be better off investing those funds for a higher return¹⁴.
Overlooking international transfer fees and exchange rates: If you receive an inheritance from overseas, be aware of potential costs associated with transferring the funds¹⁵.

Estate Planning

Estate planning is essential for everyone, but it becomes even more critical when you receive an inheritance. A well-crafted estate plan ensures that your assets are managed and distributed according to your wishes and in a way that honors God¹⁶.

Here's a checklist of essential estate planning steps:

Create or update your will: A will allows you to specify how your assets should be divided and who should care for your minor children¹⁶.
Establish a power of attorney: This document designates someone to make financial and medical decisions on your behalf if you become incapacitated¹⁶.
Consider a living trust: A trust can offer greater control over asset distribution, privacy, and probate avoidance¹⁷.
Review beneficiary designations: Ensure that your retirement accounts and insurance policies have up-to-date beneficiaries¹⁸.
Consult with an estate planning attorney: An attorney can help you navigate the complexities of estate planning and ensure your documents are legally sound¹⁹.

Biblical Examples of Stewardship

The Bible provides examples of individuals who demonstrated wise stewardship. Joseph, for instance, saved Egypt from famine through careful planning and resource management²⁰. He interpreted Pharaoh's dream about an impending famine and advised him to store grain during the years of plenty. This foresight and responsible management of resources preserved lives and demonstrated wise stewardship on a national scale.

Another example is the widow who gave her last two mites²¹. Though her offering was small in monetary value, Jesus commended her for giving sacrificially from her poverty. This act of faith and generosity highlights the importance of giving to God from a heart of love, regardless of the amount.

These examples, along with the many teachings on stewardship found throughout Scripture, provide guidance for managing resources responsibly and using them for God's glory.

Resources and Tools

Several resources can assist you in planning for and managing an inheritance:

Estate Planning Attorneys: An attorney can help you create or update your will, trusts, and other estate planning documents¹⁶.
Financial Advisors: A financial advisor can provide guidance on investing, budgeting, and other financial matters²². Seek advice from a trusted financial advisor who shares your Christian values⁸.
Christian Financial Ministries: Organizations like Ramsey Solutions and Crown Financial Ministries offer biblically-based financial advice⁹.
Online Resources: Websites like Investopedia and NerdWallet provide valuable information on estate planning and inheritance¹⁸.

Stories and Examples

The story of Jane, who inherited a condo, illustrates the importance of seeking wise counsel and making informed decisions²⁵. Initially unsure whether to sell the property or keep it as a rental, Jane sought advice from a financial advisor. This guidance helped her assess her options and make a choice that aligned with her financial goals and values.

On the other hand, the story of the man who squandered his inheritance on a lavish lifestyle highlights the dangers of impulsive spending and neglecting long-term financial planning²⁶. He quickly spent his inheritance on extravagant trips, parties, and drugs, ultimately ending up in debt and regretting his choices. This cautionary tale emphasizes the need for discipline, wise counsel, and a focus on eternal values when managing an inheritance.

Biblical Wisdom on Money and Stewardship

Verse	Principle	Application to Inheritance
Matthew 6:24	You cannot serve both God and money.	Prioritize your relationship with God and make financial decisions that honor Him, rather than pursuing wealth for its own sake.
Proverbs 13:11	Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.	Avoid impulsive spending and instead focus on long-term financial planning and wise investments.
1 Timothy 6:10	The love of money is a root of all kinds of evils.	Be on guard against greed and the temptation to use your inheritance for selfish gain.
Proverbs 22:7	The rich rule over the poor, and the borrower is the slave of the lender.	Use your inheritance to eliminate debt and achieve financial freedom.
Luke 12:15	One's life does not consist in the abundance of his possessions.	Remember that true wealth lies not in material possessions but in your relationship with Christ and the opportunity to use your resources for His kingdom.

Conclusion

Receiving an inheritance can be both a blessing and a challenge. It's a time to reflect on your values, seek God's guidance, and make a plan that honors Him. By avoiding common pitfalls, seeking wise counsel, and prioritizing eternal values, you can steward this unexpected provision responsibly and use it to further God's kingdom. If you're feeling overwhelmed by the emotional and spiritual weight of an inheritance, remember that God is your provider and will equip you with the wisdom and strength you need. Take heart in His promises and seek support from your church community and trusted advisors.

Works cited

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Ralph V. Estep, Jr.

Christian Financial Consulting

Ralph V. Estep, Jr. is a highly accomplished professional with a diverse background in finance, accounting, technology, and entrepreneurship. As the principal at Saggio Management Group, Inc., he has demonstrated exceptional leadership and expertise in various roles throughout his career.

Ralph's educational journey began at St. Mark's High School in Newark, Delaware before attending the University of Nebraska where he was an esteemed member of the Cornhusker Marching Band and had the privilege of performing at the Florida Citrus Bowl in Orlando.

Continuing his pursuit of knowledge and excellence, Ralph earned a Bachelor of Science Degree in Accounting from the University of Delaware. He further expanded his academic achievements by obtaining a Master's in Business Administration from Wilmington University.

Throughout his professional journey, Ralph has been recognized for his outstanding accomplishments and commitment to excellence. He is a member of prestigious organizations such as the Golden Key National Honor Society and Beta Gamma Sigma International Business Honor Society.

With an extensive range of professional designations including Licensed Public Accountant (LPA), Accredited Business Accountant (ABA), Accredited Tax Advisor (ATA), Accredited Tax Preparer (ATP), and Internal Revenue Service Registered Tax Preparer (RTRP), Ralph possesses comprehensive expertise in tax preparation and financial management.

Beyond his impressive qualifications, Ralph has actively engaged with various community programs as bo… Read More

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