As the largest and wealthiest generation of Americans prepares to retire, as much as $68 trillion will be passed down to younger generations over the next two decades. This phenomenon, dubbed “The Great Wealth Transfer,” is already beginning today.

Whether expected or unexpected, if you receive an inheritance, do you know what to do on day one? Planning reduces the risk of not using the money efficiently and helps remove emotion from the process. Read on for three critical steps for heirs to take when receiving an inheritance.

1. Discretion is key

Remember that receiving an inheritance is no business but your own as an heir. It is usually in your best interest to keep the matter as private as possible. Think about lottery winners whose winnings make the local news. Often, the lucky winners find themselves inundated with cash requests from friends, family, neighbors, co-workers, old classmates and perfect strangers.

Making rational decisions with money is hard enough without a public audience. Keeping the news between you and your spouse or partner can help reduce external influences around financial decisions involving your inheritance.

2. Consult with your family tax advisors

Receiving an inheritance has possible income tax, estate tax and inheritance tax implications. Before even thinking about retiring debt, making a major purchase or investing any inherited assets, you should understand the tax landscape and what taxes, if any, you may owe as an heir.

Receiving an inheritance may not be a taxable income event. Still, the earnings that the inherited assets produce – such as interest, dividends, rental income and farm income – are usually treated as ordinary income and need to be reported on the heir’s tax return each year. Potential taxes on capital gains should also be considered before inherited assets are sold.

Beyond consulting with your tax advisor, an heir should confirm that the grantor/testator’s final tax obligations have been satisfied. By being proactive, you can avoid the uncomfortable situation of needing to return part of an inheritance to cover the grantor/testator’s final income tax or estate tax obligations. It happens more often than you might think.

3. Consult with your financial advisor

Once the tax landscape is properly addressed, you have many choices ahead regarding how to use your inheritance. Spend? Retire debt? Save? Invest? Donate? All of the above? It can be difficult to weigh the various options and make informed decisions because emotion tends to creep in, skewing judgment, but this is where consulting with an objective financial advisor can make all the difference. The advisor can help you identify possibilities, analyze them, and make plans based on what is best for you and your family based on your unique goals and situation.

NOTE: Bankers Trust Company and its affiliates and their representatives do not provide tax or legal advice. This article is intended for informational purposes only and should not be construed as tax or legal advice. You should consult with your tax and legal advisors regarding your unique situation and needs.