What Should I Do After Receiving an Inheritance?

Step 1: The Deliberate Pause

Many estate attorneys and financial advisors who work with inheritance situations recommend a deliberate pause of six to twelve months before making significant, irreversible financial decisions after receiving a major inheritance. This is not inaction — it is a period during which the recipient understands the assets, assembles appropriate advisors, and allows for emotional adjustment in situations where the inheritance arrives alongside grief or significant life change.

The decisions most commonly made prematurely in this period — major gifts to family, large purchases, trust elections, investment allocations — are also among the most difficult to reverse. Time spent in deliberate orientation frequently prevents costly structural mistakes.

Step 2: Understand the Assets Received

Inherited assets may include a wide variety of types, each with different structural and tax characteristics:

• Taxable investment accounts: Typically receive a step-up in cost basis to the date-of-death value, which affects the tax treatment of future sales
• Inherited retirement accounts (IRAs, 401(k)s): Subject to distribution rules that changed significantly under the SECURE Act — generally requiring distribution within 10 years for most non-spouse beneficiaries
• Real estate: May also receive a stepped-up basis, but comes with its own operational, tax, and disposition considerations
• Business interests: Require valuation and carry their own governance, operational, and transfer considerations
• Trust distributions: Governed by the trust document, which may restrict or direct how distributions may be used

Step 3: Review Inherited Account Distribution Rules

Inherited retirement accounts are subject to distribution rules that have changed significantly in recent years. For most non-spouse beneficiaries, the SECURE Act (2019) and subsequent regulations generally require that inherited IRAs be fully distributed within 10 years of the original owner's death. The structure and timing of distributions within that window has meaningful tax implications that benefit from review before the first distribution is taken.

Step 4: Assemble Appropriate Advisors

A significant inheritance may warrant professional review that was not previously necessary — estate attorneys, tax advisors with inheritance experience, financial planners. If these relationships are not already in place, assembling a qualified team before making major decisions is a common structural recommendation. Well-meaning but unspecialized advice — from family, friends, or advisors without specific inheritance planning experience — is a common source of structural errors in post-inheritance planning.

Step 5: Integrate With Existing Planning

A significant inheritance typically creates a need to review existing planning structures:

• Are existing estate documents — will, trusts, powers of attorney — appropriate given the new asset level?
• Are beneficiary designations on existing accounts consistent with the current estate intention?
• Does the investment strategy for the inherited assets align with the overall financial picture?
• Are there charitable or gifting intentions that are most effectively addressed through planning established soon after the inheritance?