With proper management and investing, receiving an inheritance is an opportunity to strengthen your financial plan and improve your progress towards financial independence.

However, this does not usually happen. On average, 1 in every 3 inheritances are spent down in 2 years or less. Here's how to create a sustainable, successful plan around your inheritance and some pitfalls you may encounter:

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Big steps to consider when receiving an inheritance:

What are Your Goals? - For most, inheritances are treated very differently than their other savings, and that leads to money be wasted or spent differently than they would with other money. So, before you begin spending your inheritance, its important to go back to your goals and see what needs help to fund.

Taxes - Depending on the types of accounts and assets you inherit, you may be subject to new rules and taxes you were not familiar with before. Not being familiar with these can lead to larger chunks of inherited money being forced to pay for taxes or penalties rather than going towards your financial goals.

Consider a $500,000 inheritance for a married couple with $100,000 in regular income located in Iowa. If they would entirely cash out the $500,000 inherited IRA, they would pay a Federal tax rate as high as 35%, and also Iowa state's tax rate of 8.53% for a total tax bill of over $210,000!

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