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An inheritance can come in the form of a lump sum payment, such as from an insurance policy payout, or assets such as cash or securities. Figuring out what to do with an inheritance is an important and difficult decision.

What to do with an inheritance?

Once you understand all of your options, you’ll be in a better position to make a good financial decision. Resist the urge to act fast. Many experts recommend that you take several months or even a year before making a decision, especially if the inheritance is tied to an emotional event, such as the death of a close friend or family member.

Here are some other considerations:

Am I doing what I can to avoid fraud?

Your inheritance may make you a target for scams, particularly if the payment has been in the news. Be particularly wary if someone approaches you to discuss what to do with the money, instead of the other way around, and walk away from promises of quick profits, guaranteed returns, or pressure to invest immediately.

Often, you can avoid fraud by asking questions and doing research on any brokers, advisers, or investment opportunities you are considering.

Do I understand my current financial situation?

Maybe you’ve never had a financial plan or lived on a budget. Now is the time to develop both. If you sit down and take an honest look at your entire financial situation, you will be in a better position to use and invest your inheritance wisely. There are many tools to help you put a financial plan together. The Ballpark Estimate, created by the American Savings Education Council, can help you calculate what you’ll need to save each year for retirement. FINRA has a college savings calculator, and the Social Security Administration has a benefits calculator to estimate your potential benefit amounts.

Do I need the help of a financial professional?

If you’re the type of person who reads as much as possible about investment choices and asks the right questions about them, you may not need expert advice. But if you’re busy with other responsibilities, or don’t feel comfortable making important financial decisions on your own, you may benefit from professional advice. While most financial professionals are honest and hardworking, watch out for unscrupulous individuals. Even if a financial professional is recommended by someone you trust, you should thoroughly evaluate their background before doing business with that professional. Make sure the financial professional is licensed, and check and to see if the individual or his or her firm has had run-ins with regulators or other investors.

Have I paid off my high interest credit card debt?

No investment strategy pays as well as eliminating any high-interest debt you may have. Most credit cards charge high interest rates—as much as 18 percent or more—if you don’t pay your balance in full each month. If you owe money on high-interest credit cards, one of the wisest things you can do is to pay them off as quickly as possible.

What if I inherit securities?

If you inherit a security and later sell it, you’ll need to know the cost basis - the value of the security on the day the person willing it died - to determine if you owe any taxes.

Here’s how cost basis works: if a person bought a stock for $10 a share and the stock’s closing price was $200 a share on the day the person died, whoever inherits the shares and sells them must pay taxes only on any gains over the $200 per share price. Or, if the stock price drops between the time of the person’s death and the time of the sale, whoever inherits and sells the shares would claim tax losses only on declines below the $200 per share price.

Consider consulting with a tax or legal professional to work through your specific circumstances.

Have I asked enough questions?

Ask questions. It’s the best advice we can give you about how to invest wisely. It doesn’t matter if you are a beginner or have been investing for many years; it’s never a bad idea to ask questions. Don’t feel intimidated. Remember, it’s your money at stake.