According to estimates, about $1 trillion will be transferred from one generation to the next between 2016 and 2026.1 Have you thought about what you’d do if you received a lump sum inheritance?

Before you start spending the cash you’ve received, there are many factors to consider. Depending on the size of the inheritance, it could have a major impact on your financial future and there could be tax considerations — your strategy should be well thought-out and intentional. You don’t have to decide on your own — working with your financial advisor, as well as your tax and legal professionals where appropriate, can help you determine a strategy that makes the most sense for you.

Here are some strategies you may want to consider.

• Pause and take time to think –First, it’s important to allow time to mourn your loved one. Making financial decisions in an emotional state is never a good idea. This may mean putting the money aside while you grieve. Consider how your family member would have wanted you to spend that money to help inform how you use it.
• Pay off debt –An inheritance may provide an opportunity to make a fresh start, debt-free. Begin by paying off high interest rate credit cards and loans, including any student loans.
• Set up an emergency fund –If you’re still working, we recommend having six to 12 months of living expenses in an emergency fund. If you’re retired, we recommend setting aside three months of living expenses for emergencies and 12 months of living expenses for everyday spending.
• Invest for your retirement –You could use part of your inheritance or lump sum to contribute to your Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) for the year.
• Save for children’s education –It’s never too soon to save for the high costs of a child’s higher education. Consider investing in a Registered Education Savings Plan (RESP).
• Make a major purchase –Would your loved one liked to have known that you took that “trip of a lifetime” or put the pool in the backyard that you’ve wanted for years?
• Review your own estate plan –An inheritance may alter your own gifting plans or just serve as a great reminder to review and update your own Wills, powers of attorneys and beneficiaries if appropriate.

Your financial strategy is likely a great roadmap for how to put your inheritance to work. Your financial advisor can help you evaluate your situation.

Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.

This article was written by Edward Jones for use by your local Edward Jones financial advisor, Nicolle Lalonde.