Key Takeaways
- Be cautious of increased spending after an inheritance. You might first consider addressing high-interest debt and ensuring your emergency savings are fully funded. Then, try to integrate your inheritance into a broader financial plan.
- It can take a long time to settle an estate. Some assets—like life insurance policies and IRAs—transfer directly to the beneficiary. Other assets may pass through a will and involve the probate process.
- With inherited retirement accounts, most beneficiaries must take all the assets out of the account within 10 years.
- With stocks and other kinds of inherited property, a “step-up in cost basis” allows the value of inherited assets to be reset, so prior gains aren't taxed.