You just inherited assets. Now protect them.
What you do in the first year determines whether your inheritance stays protected — or becomes exposed to taxes, creditors, and divorce.
Why estate planning matters after an inheritance
An inheritance is already taxed, structured, and delivered. What happens next is up to you.
If you deposit it into a joint account, commingle it with marital funds, or skip documentation — you may lose the legal protections that came with it. That means creditors, lawsuits, or a future divorce could reach assets that were once shielded.
Keeping your inheritance protected isn't hard, but it does require intention. The right moves now preserve what you've received — and position you to pass it forward.
What you need to know
1
Understand what you've received
Is it cash, real estate, retirement accounts, or a share of a trust? Each has different rules for how it's taxed, titled, and protected.
2
Don't commingle
Depositing inherited funds into a joint account can convert them from separate property to marital property. If asset protection matters, keep them separate.
3
Watch the tax rules
Inherited IRAs have strict distribution timelines (often 10 years). Miss a deadline and you could face penalties.
4
Update your own plan
Your inheritance may change what you're passing on. Review your trust, beneficiaries, and estate structure.
5
Document the source
Keep a paper trail showing what you inherited, when, and from whom. This protects you if someone later claims the assets were marital or owed.
6
Consider a trust
If your inheritance is substantial, placing it in a trust can provide asset protection, tax efficiency, and clear succession.
Your inheritance checklist
Get a complete inventory of what you've inherited and how each asset is titled
Open a separate account for inherited cash — do not commingle with joint funds
If you inherited an IRA or 401(k): confirm the distribution rules that apply to you
If you inherited real estate: decide whether to keep, sell, or transfer into your trust
Document the date-of-death value for each asset (this is your stepped-up basis)
If you're a trust beneficiary: get a copy of the trust and understand your rights
Update your own trust to reflect your changed estate
Update beneficiaries on your retirement accounts and life insurance
Check if estate taxes apply to your inheritance — use our calculator
Consult a tax professional before selling inherited assets or taking distributions
Frequently Asked Questions
Generally, no. Inherited assets aren't taxable income. The exceptions: distributions from inherited retirement accounts (taxed as ordinary income), and ongoing income the inherited assets produce (interest, dividends, rent). The estate may have paid estate taxes before you received anything, but that's not your bill.
When you inherit an asset, your cost basis resets to its value at the date of death — not what the deceased originally paid. If your parent bought stock for $10,000 and it's worth $100,000 when they die, you inherit it at $100,000. Sell it for $100,000 and you owe no capital gains. This can save you a significant amount if you sell inherited assets.
Don't commingle it. Open a separate account in your name alone, keep records showing the source, and don't deposit it into joint accounts or use it to buy jointly-titled property. Once it's mixed, it's hard to unmix.
It depends on when the original owner died and your relationship to them. Spouses have the most flexibility. Non-spouse beneficiaries who inherited after 2019 generally must empty the account within 10 years. Miss the deadlines and you'll owe penalties.
Usually, yes — if you want them to avoid probate when you die. But think before you retitle. Some inherited assets (like an inherited IRA) can't go into a trust. Others may lose creditor or divorce protection if retitled incorrectly. Know what you have before you move it.
Free tools to help
Documents and calculators to guide you through the process.
How Much Are Estate & Inheritance Taxes?
Calculate federal estate tax, state estate tax (12 states + DC), and inheritance tax (5 states) for an estate or trust.
Use Calculator
Who Inherits Without a Will?
Find out who inherits your estate and how much they get if you die without a will. Based on your state's intestate succession laws.
Use Calculator
Are My Beneficiary Designations Protected?
See how your state handles beneficiary designations after divorce, inherited IRA creditor protection, and spousal consent requirements for retirement accounts.
Check Now
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