- /
- /
Receiving an inheritance often comes during one of life's most difficult moments—the loss of someone you loved. As you navigate grief and family dynamics, you're suddenly responsible for financial decisions that will impact your future for decades. The pressure to "do the right thing" can feel overwhelming.
Here's what you should do first after inheriting money or property.
Pause Before Making Major Decisions
Your first step is actually not a step at all—it's a pause. The 60-90 days following an inheritance are when costly mistakes happen most frequently. You're emotionally vulnerable, potentially unfamiliar with substantial wealth management, and likely receiving unsolicited advice from every direction.
Resist the urge to make immediate decisions about investing, spending, or giving away your inheritance. Unless you're facing genuine financial emergencies or time-sensitive tax deadlines, you have time to develop a thoughtful plan.
Park liquid funds in a high-yield savings account or money market fund temporarily. This keeps the money safe and accessible while you create breathing room to make sound decisions without emotional pressure or rushed timelines.
Take Inventory of What You've Inherited
Before you can plan, you need to understand exactly what you've received. Inheritances rarely arrive as simple cash deposits—they're often a mix of different asset types, each with distinct tax treatment and management requirements.
Create a complete inventory. Document all inherited assets including bank accounts, investment accounts, retirement accounts, real estate, vehicles, business interests, life insurance proceeds, and personal property of significant value. Note account numbers, institutions, approximate values, and the names on titles or accounts.
Pay special attention to inherited retirement accounts like IRAs or 401(k)s. These assets come with complex distribution rules that vary based on your relationship to the deceased, whether they had started taking required minimum distributions, and when they passed away. Mistakes with inherited retirement accounts trigger severe tax penalties.
If you've inherited real estate, business interests, or valuable personal property, you may need professional appraisals to establish fair market value for tax purposes. This valuation determines your "stepped-up basis" for future tax calculations.
Understand Your Immediate Tax Obligations
Different inherited assets create different tax implications, and some require immediate attention to avoid penalties.
Inherited retirement accounts often require beneficiaries to take distributions according to specific IRS rules. The SECURE Act changed these rules significantly, eliminating the "stretch IRA" for most non-spouse beneficiaries. Many beneficiaries now must empty inherited retirement accounts within 10 years of the original owner's death, creating potential tax-planning challenges.
Inherited taxable investment accounts typically receive a stepped-up cost basis equal to the fair market value on the date of death. This means if your parent bought stock for $10,000 decades ago and it's worth $100,000 when you inherit it, your basis is $100,000—eliminating $90,000 of taxable capital gains. Understanding this basis step-up is critical before you sell anything.
Real estate inheritance can trigger property tax reassessments in some states, potentially increasing your annual property tax burden. Some states, like California, offer exemptions for transfers between parents and children—but you must file the proper paperwork within specific timeframes.
Estate taxes rarely affect most inheritances (only estates exceeding $13.61 million per person in 2024), but some states impose separate inheritance or estate taxes with lower thresholds. Consult with a CPA familiar with your state's rules to understand your specific obligations.
Assemble Your Advisory Team
Complex inheritances require coordinated professional guidance from multiple disciplines. Trying to navigate this alone often leads to expensive mistakes or missed opportunities.
You may need some combination of these professionals:
An estate attorney if the estate is still being settled, if there are title transfer issues, if you've inherited real estate or business interests, or if family disputes arise.
A CPA or tax advisor to understand the tax implications of your inherited assets, plan distribution strategies for inherited retirement accounts, handle any estate tax filings, and integrate the inheritance into your overall tax strategy.
A financial advisor to help invest liquid assets, develop a comprehensive wealth management strategy, coordinate with your other professionals, and provide objective guidance during an emotional time.
Other specialists depending on what you've inherited: real estate agents for property sales, business valuation experts for inherited businesses, insurance professionals to review coverage needs.
The key is ensuring these professionals communicate with each other. Uncoordinated advice from multiple advisors often creates conflicts, gaps, or contradictory recommendations. Look for professionals experienced in wealth transitions who understand the importance of collaborative guidance.
Address Any Immediate Financial Vulnerabilities
While you're generally pausing major decisions, some situations require prompt action to protect your inheritance or your overall financial security.
If you've inherited real estate, ensure adequate insurance coverage immediately. Vacant properties face higher risks and may not be covered under standard homeowner policies. Review liability coverage, especially if the property will be rented or sold.
If you're carrying high-interest debt—credit cards, personal loans, or private student loans—consider using a portion of your inheritance to eliminate these balances. Paying off debt at 18-25% interest rates delivers guaranteed returns that investment markets rarely match.
Shore up your emergency fund if it's inadequate. Having 3-6 months of expenses in liquid savings provides stability and prevents you from needing to access investments at inopportune times.
Review your own estate planning documents. An inheritance often means you now have assets that need protection through updated wills, trusts, or beneficiary designations. Don't skip this step—failing to protect inherited wealth through proper estate planning creates the same problems for your own heirs.
Resist Pressure From Others
Inheritances often trigger unexpected pressure from family members, friends, and even strangers once word gets out. Some requests come from genuine need, others from entitlement or manipulation.
You're not obligated to share your inheritance with anyone, regardless of their relationship to you or the deceased. Even well-meaning requests to "help out" siblings, pay for relatives' expenses, or fund others' dreams can derail your own financial security if not carefully considered.
If you choose to help family or make gifts, do so after developing your comprehensive plan and consulting with your advisory team about tax implications and long-term impact. Emotionally-driven giving in the immediate aftermath of inheritance often leads to regret and resentment.
Set clear boundaries. You don't owe anyone detailed explanations about your inheritance or your plans for it. A simple "I'm working with my advisors to make thoughtful decisions" closes most conversations without creating conflict.
Your Path Forward
After inheriting money or property, your most important first step is creating space for sound decision-making. Take inventory of what you've inherited, understand your tax obligations, assemble a coordinated advisory team, address any immediate vulnerabilities, and resist pressure from others to make hasty decisions.
Your inheritance represents more than financial assets—it's often a final expression of love and care for your future. Honor that gift by treating it with the thoughtfulness and planning it deserves, not by rushing into decisions you'll later regret.
This information is for educational purposes only and should not be considered personalized financial, legal, or tax advice. Every inheritance situation is unique. Consult with qualified professionals before making decisions about inherited assets.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor and separate entity from LPL Financial.
Chesapeake Financial Planners | 2402 Scotlon Ct, Forest Hill, MD 21050 | (410) 652-7868 | www.chesapeakefp.com