My mom wants me to sign over my $250K beneficiary check, says I can keep $5,000 for my wedding. She gets the house, savings and collects Social Security. Am I selfish for wanting to keep it?

Should Riley sign over her beneficiary check?

Every situation is different but in this case, Riley was clearly named the beneficiary of her dad’s life insurance policy, while Riley’s mom was named the beneficiary of his retirement savings.

Unless coercion is involved, it’s hard to make a “mistake” when assigning a beneficiary — a policyholder needs to provide the beneficiary’s full legal name, as well as additional information such as a Social Security number.

If Riley’s mom really wanted to, she could contest the life insurance beneficiary, though she’d need a valid case (and legal support) to successfully do so. For example, the beneficiary could be contested if the policyholder had dementia or cognitive impairment — and you can prove the policyholder was incapable of making sound decisions at the time of designating a beneficiary — or if the policyholder was coerced or signed the policy under duress.

Riley’s dad, however, was of sound mind before he passed. Riley could really use the money, and it’s likely her dad recognized this and wanted to leave something behind for his daughter to give her a leg up in life.

Life insurance money received as a beneficiary isn’t taxed (it’s not included in gross income), though any interest you make on that money would be taxable. With this in mind, Riley's inheritance could truly be a life-changing windfall if she were to keep it.

If she were to sign the check over to her mother, it would be considered a gift that would go toward her lifetime gift tax exclusion. In 2025, the annual gift tax exclusion is $19,000, which means if Riley gifts more than that to her mother, she’d have to report it to the IRS. Riley likely wouldn’t pay taxes on it, but it would count toward her lifetime gift tax exclusion of $13.99 million. Riley would be wise to seek legal assistance to help her navigate such a gift, if that’s the route she chooses to take.

Keeping the money could substantially reverse Riley’s fortunes, though it could strain her relationship with her mother at the same time. Signing the check over to her mother, however, could breed resentment from Riley in the long run. It’s a tricky situation.

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What to do with a financial windfall

If Riley decides to keep the money, she’ll have to decide what to do with it. Most financial experts agree that if you experience a windfall — receiving an unexpected lump sum of money — it’s okay to use a (small) portion of it on something splurge worthy. Riley could seemingly spend $5,000 (as her mom suggested) on her wedding, which may allow her and her spouse to limit any wedding debt they may incur.

From there, most financial experts recommend building an emergency fund (if you don’t already have one), paying off high-interest debt (such as loans and credit-card debt), maxing out retirement savings plans and choosing a diversified mix of investments that includes stocks, bonds, ETFs and possibly alternative assets.

In Riley’s case, if she wants to buy a house, she could consider using a portion of that money for a down payment. She may also want to consider opening a 529 college savings plan for her future children and maxing out her 401(k).

However, most financial experts also suggest not making any rash decisions after receiving a financial windfall, whether it’s an inheritance or winning the lottery. In this case, Riley is dealing with the death of her father — right before she’s about to get married — and the pressure she’s receiving from her mother to sign over the beneficiary check has likely put Riley on quite the emotional rollercoaster.

Riley could place the money in some safe investments for the time being and, when she’s ready and able, work with a financial advisor to determine the best way to reach her financial goals. But Riley may need to have an uncomfortable conversation with her mother before she does anything with the money.

It’s worth considering that Riley's dad must have left the money to her for a reason, and it’s also important that his wishes be honored.