What Should I Do If I Inherit Money, a 401(k), IRA, Brokerage Account, Business, or Property?

Inheriting wealth—whether it’s cash, retirement accounts, investments, a business, or property—can feel both like a blessing and a burden. Along with the emotional side of losing a loved one, you’re suddenly faced with a flood of financial decisions.

The question is the same for everyone:👉 “What should I do with my inheritance?”

The truth is, what you do in the first 6–12 months after inheriting can make the difference between preserving a legacy for decades—or losing a large portion to taxes, poor planning, or bad investment choices.

This guide breaks down the main types of inheritances and the smartest steps to take with each.

1. If You Inherit Cash

• Don’t rush. Deposit it safely, take time before making big moves.

• Beware of taxes. Cash itself usually isn’t taxed, but interest or investment gains going forward will be.

• Smart move: Consider shifting cash into tax-advantaged structures that protect against inflation and build predictable income.

2. If You Inherit a 401(k) or IRA

• New rules apply. Non-spouse heirs typically must withdraw the entire balance within 10 years. Every dollar is taxable.

• Spouses can roll it over into their own retirement account.

• The trap: Leaving it as-is usually creates a massive tax bill for you or your kids.

• Smart move: Explore converting to tax-free strategies (such as private endowment plans or insurance-based solutions) that protect and grow the balance instead of liquidating it.

3. If You Inherit a Brokerage Account or Mutual Funds

• Step-up in basis. Most inherited investments receive a new “cost basis,” which can reduce or eliminate capital gains tax if sold.

• Options: You can liquidate and diversify, or keep them invested.

• The risk: Leaving money exposed to market volatility, especially if you’ll need income soon.

• Smart move: Reallocate into structures that balance growth with downside protection.

4. If You Inherit a Business

• Decide: keep, sell, or restructure.

• Tax implications: Business transfers can trigger estate and capital gains taxes.

• The challenge: Businesses are often illiquid and hard to split among heirs.

• Smart move: If keeping it, build a succession plan. If selling, use tax strategies to preserve wealth and transform proceeds into lifelong income.

5. If You Inherit Real Estate or Property

• Primary residence: May qualify for special tax treatment.

• Investment property: You get a step-up in basis, but rental income is taxable.

• Risk: Property is illiquid, expensive to maintain, and can cause disputes among heirs.

• Smart move: Evaluate whether to keep, sell, or exchange (e.g., 1031 exchange for investment property). Redirect proceeds into tax-efficient vehicles.

Common Mistakes People Make With Inheritances

• Spending too quickly without a plan.

• Failing to consider taxes. A $1M inheritance could shrink to $600K or less if handled poorly.

• Keeping everything “as-is.” What worked for your parents may not work for your financial goals.

• Not thinking long-term. Inheritances can disappear in one generation—or be structured to last for many.

A Smarter Approach: Turn Inheritance Into a Family Endowment

Instead of just managing an inheritance, wealthy families use it as the foundation for a family endowment—a system designed to:

• Provide tax-free, predictable income for life.

• Have account matched every year for life and every year after life

• Protect assets from lawsuits, creditors, and market crashes.

• Pass wealth to children and grandchildren without tax erosion.

• Grow into a dynasty plan that compounds for generations.

This is the Platinum Endowment model: transforming sudden wealth into multi-generational prosperity.

FAQs

Do I have to pay taxes on an inheritance? It depends. Cash is usually tax-free, but retirement accounts are taxable when withdrawn. Investments and property often get a step-up in basis, reducing taxes if sold.

What’s the safest thing to do first with an inheritance? Don’t rush. Park it safely, consult professionals, and create a plan before making large purchases or investments.

How do I avoid losing my inheritance to taxes? Strategic planning—such as using insurance-based structures, trusts, and tax-free conversions—can dramatically reduce or eliminate taxes.

How do I make sure my kids benefit from the inheritance too? Rather than passing taxable accounts, you can restructure wealth into a family endowment that grows tax-free for multiple generations.

The Bottom Line

Inheriting wealth is an opportunity—but also a responsibility. Without a plan, much of what you receive can disappear to taxes, poor investments, or short-term spending. With the right strategy, it can become the foundation of a family legacy that lasts for generations.

At Platinum Endowment, we specialize in helping families turn inheritances into dynastic wealth—protected, tax-free, and designed to grow for 100+ years.

👉 If you’ve inherited money, investments, or property, schedule a private consultation today to explore how to transform it into a permanent family endowment.