We all have those times we wish we could win the lottery or inherit a ton of money from a rich, long lost relative we didn’t even know we had. However, reality always comes into play. Unfortunately, inheriting money or anything else means that someone close to you has passed away. It’s at times like this it isn’t a good idea to make major money decisions because, face it – you are not really thinking straight right then.

The first chance you get, call your tax professional and let them know what happened. They can help you walk through the difficult journey ahead. If your loved one had a will and a good estate plan, this will be much easier. Contact the attorney or the person who set this up, then start looking for things like life insurance policies, retirement funds and documentation for assets such as houses and vehicles. Hopefully the attorney or estate planner already has all this information, if not you will have a long journey ahead of you.

If you were appointed as the executor of the will you will have even more work cut out for you. First, read the will or estate thoroughly, if you don’t understand it get help. If the person was receiving Social Security, contact the Social Security office, you can be held liable for checks that should not have been issued. Final tax returns for the deceased person must be filed, and often estate or trust taxes must be filed. Don’t forget every state has different regulations concerning final returns, estates, wills and probate so ask questions – lots of them.

Now that all of that is taken care of, you may have a large inheritance check in front of you. Although it is possible you inherited a house or other assets that may not be cash assets. Now what? If it is hard assets such as houses or other property you must first determine if you will sell it, live in it, or rent it out. Each of these choices will affect your taxes in different ways. If you sell it, you will have a gain or loss based on the difference between the fair market value as of the date of death or the inheritance date and when you sell it. If you move into the house there’ll be no tax consequences until you ultimately sell it or pass it on to your heirs. If you rent it, then the income from the rental will be income to you and must be reported on your taxes.

What about liquid assets, also better known as cold, hard, cash? Depending on the amount you receive, will want to consult a good financial planner. The money will not be taxable to you because it was already taxed in the estate. Any income produced from that inheritance however, such as interest or dividends will be taxable to you.

The bottom line – get good advice from the start. Don’t splurge and go on a spending spree until you know and understand the will and how it will affect you and your finances.