The largest transfer of wealth in history is beginning to unfold. Even with the market collapse, $10 to $136 trillion in wealth will move from one generation to the next.

Perhaps you have been or will be one in four Americans who are lucky enough to receive one of these bequests. If so, here are a few suggestions on how you can use your inheritance.

Consider these facts:

• Average inheritances range from $10,000 to $50,000

• 85% of inheritances are gone within 5 years

• Inheritances are most commonly spent on:

1. Cars
2. Vacations
3. Bigger homes
4. College Education
5. Starting a Business

While a small windfall may prompt you to spend it all at once, try to consider the thoughts and feelings of the person who left you with your inheritance. They may have saved that money for years just so you would have some comfort in your life.

It’s Your Debt – Take Care Of It

Getting out of debt is an admirable goal, however this too deserves careful consideration when using inherited money. Financial planners looking simply at the raw numbers would certainly recommend this strategy especially given the high cost of some debt, such as credit card interest ranging from 19% to a truly unconscionable 30%.

Did this generous person leave you this money to pay off your daily lattes, the cute sundress you couldn’t resist, all those great dinners at restaurants you wanted to try, the fun weekend trips, the wide screen television, the timeshare you thought was such a bargain, the collection of top shelf vodka for your martini bar? I doubt it! You wanted these things and that’s great if you can afford them. If instead, they were charged because you couldn’t really afford them, the bill is now due and the price is 19-30% higher than when they were purchased. It seems prudent to realize it was not your benefactor’s intent to buy you these things. This type of debt should be paid with your own earned income and not your inheritance.

Education Is Money

Paying off debt for education is another consideration. Your benefactor most likely wanted you to be well educated and able to take care of yourself and your family. If you have student loans or current college expenses for yourself or your children, using your inheritance for this debt might make your parents or grandparents smile.

Slow and Steady

Paying off your home mortgage is usually not the best option. Mortgage interest rates are historically low and are tax deductible. Unless you are close to retirement and cannot make the payments from earnings, putting the money to work for you to generate an income stream is often a better option.

Stay Away from Stocks

Unless you’re a professional with considerable experience, dabbling in stocks with your inheritance is foolhardy.

Fund Your Retirement

Funding your retirement through your 401K, a Roth or traditional IRA would be excellent options. If you own a small business, a SIMPLE IRA can easily be set up at Vanguard or Fidelity and $11,500 per year can be placed in a tax-deferred account for your golden years. Choose a well-diversified portfolio of index funds to reduce your risk and maximize your return, keeping fees to a bare minimum.

Pass It On

If you have children, consider helping them as your parents and grandparents helped you. Perhaps a 529 plan for college, a down payment for their first home, paying off their student loans to help them get out from under a debt load, or helping them fund their retirement accounts would be a fitting tribute.

Take Your Time

Where, when and how to spend an inheritance is a much bigger decision than just buying a new car or paying off your credit cards. Put the money somewhere safe, in an FDIC insured bank account or in CDs, and think through your life goals and the wisdom and values your benefactor tried to share with you during his or her lifetime. Take your time and do something with the money that would make your benefactor (and you) proud.

Also, consider investing in professional advice from a fee-only certified financial planner.