Inheritance / sudden wealth advisors

Nothing fast. Park the money somewhere safe, understand any tax implications (basis step-up, inherited IRA rules, estate taxes already paid), and grieve or adjust before making commitments. Most costly mistakes happen in the first year, and almost no decision is urgent.

Usually not at the federal level for the recipient - estates pay estate tax, not heirs. Key exceptions: inherited retirement accounts have their own distribution rules with income tax consequences, and a few states tax inheritances. The step-up in basis on inherited assets is usually the bigger tax story, in your favor.

Most non-spouse beneficiaries must empty the account within ten years of the original owner's death, with annual required distributions in some cases. Withdrawals are taxable income. The timing within that window is a real planning decision - coordinate with your other income year by year.

The research on lump-sum versus gradual investing favors investing promptly, but the emotional reality of sudden wealth argues for a staged approach if that keeps you invested. What matters more: a written allocation you can hold through a downturn, sized to goals the money is actually for.

Plenty of people manage inheritances well on their own. An advisor earns their fee when the money interacts with estate documents, trusts, inherited retirement accounts, business interests, or family dynamics - or when the amount is large enough that mistakes are expensive.