The short answer: After receiving an inheritance, identify what you inherited, confirm any deadlines, and understand the tax rules before spending, selling, or moving assets. Then build a plan for how the inheritance will support your income needs, retirement, family, and generosity. You do not need to make every decision at once.
Receiving an inheritance can be bittersweet. You may feel grateful for the gift while deeply missing the person who left it to you, and unsure what to do next. You do not have to have all the answers right now. Give yourself room to grieve, and know that you can work through the financial decisions one thoughtful step at a time.
When you feel ready to look ahead, you do not have to begin with investment choices. I would start with a gentler question: “What do I want this money to make possible – for my family, my future, and the people or causes I care about?”
The investment decision matters. But it belongs inside a plan—not at the front of the line waving its arms.
- Pause on big decisions, but check deadlines now
I would separate decisions that need attention from decisions that simply feel urgent. Buying a second home, making large gifts, or quitting work can usually wait until you have reviewed the whole picture. While you are mourning, give yourself permission to let the dust settle before making big, permanent decisions. You can honor your loved one without deciding right away what the rest of your financial life should look like. However, required account distributions and estate paperwork deserve earlier attention.
Ask the executor, trustee, or account custodian what needs to happen next, who is responsible, and when. If the inheritance includes an IRA, ask whether any required distribution remains due for the year of the original owner’s death. The IRS notes that an owner’s unfulfilled required minimum distribution may still need to be taken. Review the IRS beneficiary guidance.
For cash already distributed to you, consider a separate account while you develop the plan, and review the institution’s applicable deposit-insurance coverage. For assets still in an IRA, trust, or estate, confirm transfer and ownership requirements before moving anything.
- Make a clear inventory of what you inherited
An inheritance is not always a check. Start with a written list:
- Cash and bank accounts.
- Stocks, bonds, and other investments held outside retirement accounts.
- Traditional IRAs, Roth IRAs, and employer retirement accounts.
- A home, rental property, land, or business interest.
- Trust interests or payments that arrive over time.
For each item, record the approximate value, ownership or beneficiary status, who controls the transfer, relevant deadlines, and whom to contact. Gather account statements, distribution instructions, available estate or trust documents, and valuation records.
This is also the time to ask what you actually own today versus what you expect to receive later. I would not build a spending plan around an estimated inheritance before the estate’s obligations and your distribution are clear.
- Understand inheritance taxes before you sell or withdraw
“Is an inheritance taxable?” is a reasonable question. The useful answer depends on the asset and what you do next.
Inherited cash
A cash inheritance is generally not federal taxable income simply because you receive it. Interest or other income it later earns can be taxable, and estate or trust distributions may include taxable income reported to you separately. Do not assume every payment from an estate is tax-free.
Inherited stocks and real estate
For inherited property, the tax basis (meaning the starting point used to determine a taxable gain) is generally its fair market value at the owner’s death. An alternate valuation may apply in certain estates. This adjustment is often called a “step-up in basis,” although the value can also move down. Selling for more than your basis can create a taxable gain. See the IRS explanation of inherited-property basis.
Before selling inherited investments or a house, ask your tax professional to confirm the basis and the records needed to support it. The amount your parent originally paid may not be the correct starting point for your tax calculation.
Inherited IRAs and retirement accounts
Retirement accounts have their own rules. Taxable distributions from an inherited traditional IRA are included in income. The distribution schedule depends on factors including your relationship to the owner, the date of death, and whether the owner had reached the required beginning date for withdrawals. See IRS retirement-account beneficiary rules.
For deaths in 2020 or later, many non-spouse individual beneficiaries must empty an inherited IRA by the end of the tenth year after the year of death. Spouses and certain other eligible beneficiaries can have different options. A ten-year deadline is not a reason to ignore the account until year ten: ask your custodian and tax professional whether annual required minimum distributions also apply to you. Review IRS Publication 590-B.
A surviving spouse may have the option to treat an inherited IRA as their own; a non-spouse beneficiary generally cannot. Confirm the right account structure before requesting a transfer or distribution. Review the IRS beneficiary options.
My planning question would be: How do withdrawals fit alongside your salary, business income, and retirement timeline? Have your advisor and tax professional compare withdrawal timing before you request a large payout. This article focuses on common federal considerations; ask your tax professional which state rules and any special reporting requirements apply to your situation.
- Give the inheritance a job within your financial plan
Before choosing investments, decide what the inheritance is for. That might include:
- Strengthening reserves and addressing expensive debt.
- Supporting retirement income or creating more flexibility about when to retire.
- Helping children or grandchildren without undermining your own financial security.
- Funding a meaningful purchase with an understanding of its ongoing costs.
- Supporting your church, charities, or other causes you care about.
As you think about the possibilities, consider three questions:
- How could this inheritance help me care for my family in meaningful ways?
- What future needs would I feel more prepared for if I set aside part of this gift?
- Where could I use a portion to bless others or support causes close to my heart?
You may decide that the inheritance changes your retirement date. Or you may decide it simply gives your existing plan more breathing room. Either can be a worthwhile outcome. There is no requirement to turn a meaningful gift into a dramatically different lifestyle.
- Review inherited investments and property with fresh eyes
Keeping everything exactly as your loved one left it is not the only way to honor them.
I would review inherited holdings alongside the investments you already own. Ask whether the combined portfolio fits your goals, time horizon, income needs, and ability to handle losses. Look carefully at large positions in a single company or industry, and review the tax consequences before selling or restructuring anything.
If you inherit a rental property, ask whether you want the responsibilities that come with it. Consider maintenance, management, expenses, and shared ownership with family members—not just the estimated rent. A property can have sentimental value without being the right long-term financial fit.
You can treasure the person without treating every asset as a family heirloom.
- Let your advisor, CPA, and attorney work from the same picture
An inheritance can involve financial planning, investment management, tax questions, and legal decisions. I would want the professionals involved to understand the same goals and responsibilities:
- Financial advisor: Help connect the inheritance to retirement, cash flow, investments, and giving goals.
- CPA or tax professional: Confirm tax treatment, reporting, basis, and distribution planning.
- Estate-planning attorney: Address legal documents, ownership questions, trust terms, and estate administration.
Ask who will track each deadline and who will confirm completion.
“I thought someone else was handling that” is not much of a planning strategy.
- Revisit your own beneficiaries and legacy goals
Once you understand the inheritance, review your own beneficiary designations and estate documents with the appropriate professionals. Ask whether your plan still reflects your wishes for your spouse, children, other heirs, and charitable causes.
For me, this is also a stewardship conversation. What has been entrusted to you, and how can you use it thoughtfully?
That does not mean you must give everything away, preserve every dollar, or feel guilty about enjoying a gift. It means making deliberate choices about provision, responsibility, and generosity. Honoring someone’s legacy can mean carrying their values forward, not necessarily copying their portfolio.
Frequently asked questions about receiving an inheritance
What is the first thing I should do after inheriting money?
Confirm what you inherited and whether any immediate deadlines apply. Gather the records and get help with ownership, transfer, and tax questions before making large spending or investment decisions.
Should I pay off my mortgage or invest my inheritance?
There is no one-size-fits-all answer. Compare the mortgage terms, your cash reserves, retirement income needs, tax situation, and comfort with debt. Ask for a side-by-side plan rather than a blanket rule.
Do I have to sell inherited stocks?
You do not need to assume an immediate sale is the right choice. First confirm any estate or trust restrictions, verify the tax basis, and evaluate the holdings alongside your existing portfolio. Let your goals guide the decision.
Can I put an inherited IRA into my own IRA?
A surviving spouse may have that option. A non-spouse beneficiary generally cannot treat the inherited IRA as their own. Verify the beneficiary rules and transfer instructions before moving funds. See the IRS guidance.
Can an inheritance help me retire earlier?
Possibly, but test the idea within a retirement plan before changing your work schedule. Review spending, healthcare costs, withdrawal timing, taxes, and how much risk your plan would need to carry. The inheritance balance alone does not answer the question.
Inheritance financial planning in Grand Junction and the Western Slope
If you have received an inheritance and want help connecting the decisions, we invite you to schedule an introductory conversation with Legacy Wealth Management.
Whether you are nearing retirement, running a business, or balancing a busy career and family, the starting point is the same: What has changed, what needs attention, and what do you want this money to make possible?
Schedule an introductory conversation with Legacy Wealth Management to discuss how your inheritance fits into your financial plan.
You do not have to solve every question today. You do need a thoughtful next step.
These are the opinions of Legacy Wealth Management, LLC and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Dan Funderburk is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice. Copyright ©2026 Dan Funderburk. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
