Inheritance
Honor the legacy left to you by handling the inheritance correctly — protecting the assets, meeting legal obligations, and making sound financial decisions without being rushed.
Your Checklist
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First 24–72 hours
Locate the will and identify the executor
The executor named in the will is responsible for administering the estate. If you are the executor, probate proceedings begin with you. If you're a beneficiary, confirm who the executor is and stay in communication.
Secure physical assets and property
If you have access to the deceased's home, vehicle, valuables, or financial documents, secure them. Do not allow informal distribution of assets before the estate is legally settled.
Notify financial institutions of the death
Banks, brokerage firms, and insurance companies need certified death certificates to freeze accounts and begin transfer processes. Order at least 10 certified copies of the death certificate — you'll need them.
Pause all major financial decisions
The first days after a death are not the time to invest, donate, spend, or make commitments with inherited funds. Give yourself at least 6–12 months before making any significant moves with a large inheritance.
Don't distribute assets before probate is complete
Even as executor, distributing assets before debts and taxes are paid can make you personally liable. The estate's creditors must be paid before beneficiaries receive anything.
Watch out for inheritance scams
Fraudsters target recent inheritors. Be suspicious of anyone who contacts you unsolicited about "investment opportunities," tax relief, or financial services following a death.
Milestones
This Week
Days 3–14
Hire an estate attorney
If the estate has any complexity — real property, business interests, multiple beneficiaries, or potential disputes — an estate attorney is essential. They file for probate, handle creditor claims, and guide distribution.
Inventory all estate assets and debts
Create a complete list of everything the deceased owned and owed: bank accounts, retirement accounts, real estate, vehicles, investments, life insurance, mortgages, credit cards, and loans.
Determine what goes through probate vs. what doesn't
Assets with named beneficiaries (IRAs, 401(k)s, life insurance, joint accounts) pass directly outside of probate. Real property and accounts without beneficiaries typically go through probate. These are different processes.
Meet with a financial planner
A financial planner who specializes in inheritance can help you think through taxes, investment decisions, and how this money fits into your overall financial picture — without the emotion of the moment.
Understand the tax implications
Inherited assets receive a stepped-up cost basis, which often significantly reduces capital gains tax when you sell. Inherited retirement accounts (IRAs) have mandatory distribution rules. A CPA can prevent expensive mistakes.
Inherited IRAs have a 10-year distribution rule
Under current law, most non-spouse beneficiaries must fully distribute an inherited IRA within 10 years. Failing to understand this can trigger large, unexpected tax bills. Get advice before taking any distributions.
Don't co-mingle inherited funds with marital assets
In most states, an inheritance is separate property — even in marriage. Depositing it into a joint account or using it to pay joint expenses can convert it to marital property, affecting your rights in a future divorce.
Getting Resolved
2 weeks to 90 days
Complete the probate process
Probate timelines range from a few months to over a year depending on state law and estate complexity. Your attorney will guide this, but expect to provide documentation and sign court filings.
Transfer titled assets into your name
Real estate, vehicles, and brokerage accounts need to be re-titled to your name before you can sell or manage them. Each asset type has its own transfer process.
File the estate's final tax return
The estate may need to file its own income tax return and possibly an estate tax return. A CPA with estate experience handles this — there are deadlines and penalties for missing them.
Make deliberate decisions about what to keep, sell, or invest
Once you're past the acute phase, work with your financial planner to integrate the inheritance into your overall financial plan. Real estate, business interests, and concentrated stock positions each need a strategy.
Update your own estate documents
Receiving a significant inheritance changes your financial picture. Update your own will, beneficiary designations, powers of attorney, and trusts to reflect your new assets.
Milestones
What to Avoid
Common mistakes and pitfalls at each stage of this transition.
Don't distribute assets before probate is complete
Even as executor, distributing assets before debts and taxes are paid can make you personally liable. The estate's creditors must be paid before beneficiaries receive anything.
Watch out for inheritance scams
Fraudsters target recent inheritors. Be suspicious of anyone who contacts you unsolicited about "investment opportunities," tax relief, or financial services following a death.
Inherited IRAs have a 10-year distribution rule
Under current law, most non-spouse beneficiaries must fully distribute an inherited IRA within 10 years. Failing to understand this can trigger large, unexpected tax bills. Get advice before taking any distributions.
Don't co-mingle inherited funds with marital assets
In most states, an inheritance is separate property — even in marriage. Depositing it into a joint account or using it to pay joint expenses can convert it to marital property, affecting your rights in a future divorce.
Frequently Asked Questions
Do I have to pay taxes on an inheritance?
Most inherited assets are not subject to federal income tax at the time of inheritance. However, income generated by inherited assets (interest, dividends, rent) is taxable, and inherited retirement accounts are subject to income tax when distributed. A CPA can clarify what you owe.
What is a stepped-up cost basis?
When you inherit an asset, its cost basis is "stepped up" to its fair market value at the date of death. This means if you sell it shortly after, you may owe little or no capital gains tax — even if the deceased had held it for decades. This is one of the most valuable features of inherited assets.
What if there's no will?
The estate passes under your state's intestacy laws, which distribute assets to heirs in a legally defined order (typically spouse, then children, then parents, then siblings). A probate court oversees the process, and the court may appoint an administrator.
Can I disclaim an inheritance?
Yes. You can formally refuse an inheritance — called a "qualified disclaimer" — within 9 months of the date of death. Reasons include tax planning, protecting assets from your own creditors, or redirecting the inheritance to the next beneficiary. An estate attorney should handle this. ---
Resources
IRS guide on tax responsibilities for estates
IRS rules for inherited retirement accounts
CFPB guide to financial decisions after a death