We Just Inherited Money. What Should We Do First?

An inheritance rarely arrives at a convenient time. It comes during grief, mixed with relief, guilt, or both at once. It may arrive as a check, a property title, a brokerage account, or a combination of assets that requires decisions before you have had time to process the loss. And the decisions themselves are not simple: different assets carry different tax rules, different timelines, and different consequences for getting it wrong.

The most important thing to do first is also the counterintuitive one. Do not make major financial decisions immediately. Park liquid assets somewhere safe, understand what you have received and how it is taxed, and give yourself time before committing to anything irreversible. Here is what that actually looks like in practice.

FREE WEBINAR

5 Things to Know About

Estate Planning

When You Turn Sixty-Five

Save the Date

Friday, Sep 25^th at 2:30pm

The First Thing to Do Is Slow Down

Grief and financial decision-making are a difficult combination. Research on inheritance behavior consistently finds that hasty decisions made in the emotional aftermath of a loss can undermine the value of what was received. The urgency to act is often felt but rarely real. With a few specific exceptions involving tax deadlines, most inherited assets do not require immediate decisions.

If you receive liquid assets, cash, a bank account payout, or a life insurance proceeds check, the right first move is to put the money somewhere low-risk and accessible while you figure out what you have and what you want to do with it. A high-yield savings account at a bank you already use is a reasonable temporary home. You are not committing to any strategy. You are buying yourself time to think clearly.

Resist pressure from financial institutions, advisors, or family members to make immediate investment decisions. This is a moment when people are often approached with products or proposals that serve the person doing the approaching more than the person who inherited. A good financial advisor or estate planning attorney will tell you to slow down. Anyone urging you to move quickly is worth approaching with caution.

Understand What You Actually Received

Inheritances take different forms, and each one carries a different set of rules. Before making any decisions, it is worth understanding exactly what you have received and how each asset is treated.

Cash and bank accounts. Cash and accounts with payable-on-death designations typically transfer directly to named beneficiaries without going through probate. Federal income tax generally does not apply to inherited cash. New Jersey does impose an inheritance tax on transfers to certain beneficiaries, though Class A beneficiaries, including spouses, children, grandchildren, and parents, are exempt.

Inherited IRAs and retirement accounts. These come with specific distribution rules under the SECURE Act of 2019 and IRS final regulations that took effect in 2025. Most non-spouse beneficiaries are required to withdraw the full account balance within ten years of the account owner’s death. If the original owner died after their required beginning date, annual distributions may also be required during that ten-year period. Every dollar withdrawn from a traditional inherited IRA is generally taxable as ordinary income to the extent it represents previously untaxed amounts. The tax impact of how and when you take those distributions can be significant, and a tax professional should be involved before any decisions are made.

Inherited real estate. Inherited real estate and securities generally receive a basis adjustment to fair market value as of the decedent’s date of death, although exceptions and special rules can apply. A tax professional should confirm the applicable basis before a beneficiary sells an inherited asset. Understanding the basis before deciding whether to sell, rent, or hold an inherited property is important, and that analysis belongs with a qualified tax professional.

Brokerage accounts and investments. Accounts with transfer-on-death designations pass directly to named beneficiaries. Inherited securities generally receive a basis adjustment as described above, though exceptions can apply. Selling inherited stock or securities before confirming the basis with a tax professional can create avoidable tax consequences.

Personal property and physical assets. Jewelry, art, vehicles, collectibles, and household goods that pass through an estate may have tax implications depending on their value. Significant items should be appraised, both to understand their value for any estate accounting requirements and to establish a basis if you later sell them.

The Deadlines That Actually Matter

While the general advice is to slow down, there are specific deadlines where moving too slowly creates real problems.

For beneficiaries subject to the 10-year rule, the inherited account generally must be fully distributed by the end of the tenth calendar year following the account owner’s year of death. Annual distribution requirements may also apply in some circumstances. Missing either requirement can trigger significant tax penalties. Getting clarity on the distribution rules early, even if you do not start taking distributions immediately, is worth doing.

If you are considering disclaiming an inheritance, meaning formally refusing to accept it so it passes to the next beneficiary, a qualified disclaimer for federal tax purposes generally must satisfy specific requirements, including a nine-month deadline in many cases. State law requirements may also apply. Because a disclaimer is generally irrevocable and can have significant tax and estate-planning consequences, it should be reviewed with legal and tax counsel before any action is taken.

If the estate is going through probate in New Jersey, the estate’s executor has specific obligations and timelines for notifying creditors and distributing assets. As a beneficiary, you may not have direct control over those timelines, but understanding where the estate is in that process helps you know when to expect a distribution and what documentation you may need to provide.

What to Do in the First 30 Days

In the immediate period after receiving an inheritance, the goal is to understand what you have, meet any urgent deadlines, and avoid making decisions you cannot undo.

Gather documentation. Collect any account statements, property records, or legal documents associated with what you have received. If assets are coming through an estate, stay in contact with the executor about the timeline and what documentation they need from you.

Open a dedicated account for liquid assets if you do not already have one. Keeping inherited funds separate from your everyday accounts makes it easier to track what you have received, manage any tax reporting, and make deliberate decisions rather than having the money absorbed into general spending.

Identify any time-sensitive decisions. Inherited IRA distribution rules, disclaimer deadlines, and decisions about real estate that may affect estate accounting all have timelines. An estate planning attorney and a tax professional can help you identify which of these apply to your situation.

Resist major spending decisions. The impulse to pay off a mortgage, fund a child’s education, make large gifts to family members, or invest a significant sum is understandable, but these decisions benefit from reflection. Waiting 90 days before making any major commitment is a reasonable standard.

What to Do in the First 90 Days

Once the immediate period has passed and you have a clearer picture of what you have received, the next phase is developing a plan that fits the inheritance into the rest of your financial life.

Meet with a tax professional to understand the tax treatment of everything you have received and to plan for any distributions that will affect your income in the current year or in future years. Inherited IRA distributions, in particular, can significantly affect your tax bracket and should be planned rather than taken without analysis.

Meet with a financial advisor if you have received a significant amount of liquid assets. An inheritance is a one-time event, and how it is invested should reflect your long-term financial situation, not the products available from whoever approached you first.

Consider whether the inheritance affects your own estate plan. Receiving a significant inheritance may change the size of your estate, affect your Medicaid planning timeline, or alter what you want to happen to your assets when you are gone. If you have an existing will, trust, or beneficiary designations, this is a good moment to review them in light of what you now own.

How an Inheritance Connects to Your Own Planning

One of the questions an inheritance raises that is often not discussed is what it means for your own estate planning. Receiving assets changes what you own, which changes what you need to plan for.

If the inheritance includes real estate, you now own property that will need to be addressed in your own estate plan. How inherited real estate is titled and coordinated with your estate plan can affect how it passes at death. Property properly transferred to and held in a revocable trust generally can pass through the trust rather than through probate, while individually owned property without another nonprobate transfer mechanism may become part of the probate estate. These are decisions worth making deliberately rather than leaving by default.

If the inheritance includes a significant amount of liquid assets, your estate may now be larger than it was when your existing estate plan was drafted. The documents you have in place may need to be updated to reflect your current circumstances, your current beneficiaries, and your current intentions.

An inheritance from someone who planned carefully is often the moment when the recipient most clearly understands the value of having done so. The assets arrived with clear instructions, transferred without confusion, and came with a structure that made the process manageable even in the middle of grief. That clarity is not accidental. It is what planning looks like from the receiving end.

Plan Well. Live Better.

Receiving an inheritance is both a gift and a responsibility. At Milvidskiy Law Group, we help New Jersey families understand what they have received, make informed decisions about what to do with it, and use the moment as an opportunity to strengthen their own estate plan so the people they love will have the same clarity when it is their turn. Learn more about our estate planning services or explore how we approach estate administration for the families we serve.

This article is for informational purposes only and does not constitute legal advice or tax advice. Inheritance tax rules, retirement account distribution requirements, and applicable law vary and are subject to change. We encourage you to speak with a qualified attorney and a tax professional to discuss your specific situation.