Avoid these 4 mistakes and misconceptions when receiving an inheritance, according to financial planners

• Many people who receive an inheritance don't spend it wisely, according to financial planners.
• It's important to come up with a detailed financial plan when you receive an inheritance.

Receiving a large amount of money from an inheritance can be life-changing — but only if you take the right steps to handle it.

It can be difficult to make big financial decisions, especially around an emotionally charged subject. According to financial advisors, many inheritors end up spending the money they receive — usually from a deceased parent or grandparent — in just a few years.

Don't worry, though, if you're expecting or recently received an inheritance. You can prevent this situation by avoiding a few simple mistakes, according to Vimala Snow, head of wealth strategy at Cresset Capital, and Dave Jones, director of estate strategy at Bailard.

Below are the most common mistakes they see clients make and how to avoid them.

Not having tough conversations early

It's definitely not a comfortable conversation, but discussing estate planning early on will save you a lot of headaches later.

Jones recommends starting small by talking about easier topics, such as the location of important documents.

"Just the location of documents can be a starting conversation. Sometimes parents don't want to talk about the exact plans yet," he said.

Asking your parents about their retirement accounts, if they have an estate plan, and what sort of assets they're thinking of passing down are good starting points.

"Those are just really basic things that can then lead into a larger discussion about the estate plan," Jones added.

It's much easier to clarify any confusion surrounding assets when the person passing their assets along is still alive, which is why these conversations are important, according to Snow. Inheritors should make sure they understand the values that parents have regarding money, as well as how certain assets should be managed.

Not having a long-term plan

This is a common mistake when it comes to financial planning in general, but it's especially relevant when a large amount of money is on the line, according to Jones.

"A lot of inheritors will spend the money, and they'll spend it quickly because they may not have had the best financial habits before the inheritance," Jones said.

He recommends considering a few basic financial planning questions. Take a look at the type of assets you're inheriting — whether it be brokerage accounts, real estate, or others — and evaluate how these fit into your current financial goals.

It depends on your personalized financial needs, but Jones recommends considering the following questions: "Do you need to generate income for yourself? Do you have an emergency fund? Do you have debts that you need to pay off?"

Inheritors who establish concrete financial goals will set themselves up for success. "There's a much higher chance that the inheritance will benefit the inheritor for a long time," Jones said.

Expecting to receive assets immediately

When coming up with a financial plan, keep in mind that you won't receive your inheritance immediately, according to Snow.

Estate administration can be a long legal process. The larger the estate, the longer the wealth transfer process will take, Snow said. It could take several months, or even years, for asset distribution to be completed.

If estate taxes are due, then the tax return will need to be submitted nine months after the date of death, Snow added.

The distribution process won't always be smooth. Complications can arise, especially over assets like a house, Jones said. If siblings inherit the family home but can't agree on what to do with the property, it could take a long time to figure out how to pass on the asset in a way that satisfies all the inheritors.

Not working with an advisor

Don't underestimate how complicated estate planning can be. It's often helpful to use the advice of a professional, especially during an emotionally turbulent time.

It might take a team of legal and financial professionals to ensure the best outcome for your inheritance. Financial advisors, tax specialists, and estate planning attorneys can all offer assistance.

Experts can help you come up with a long-term strategy for investing an inheritance. In more complicated cases, such as if the person died without a will, you may need to consult a probate lawyer to locate and value the deceased's assets. The laws governing estate taxes can also vary from state to state, so getting an expert opinion can help clarify confusion.

"Making sure that you're asking lots of questions and relying on your team is a really important part of the process rather than trying to do it yourself because it is pretty complicated," Snow said.