You Inherited Money. What Should Happen in the First Year?

Written by the William Allan team · Reviewed by Jason Crawshaw, CPA · 2026-07-27

Most financial planning content about inheritance is written for the person leaving it. Far less is written for the person receiving it, which is strange, because that is the harder position to be in.

An inheritance arrives attached to a death. The money and the grief show up together, and the money usually shows up first, in the form of paperwork, while the grief is still fresh. People are asked to make consequential decisions during the period they are least equipped to make them.

Here is a reasonable way to think about the first year.

Do less than you feel pressured to do The most useful thing most people can do in the first few months is very little.

There is real pressure in the other direction. Institutions send forms with deadlines. Well-meaning people offer suggestions. There can be a sense that a windfall demands a decisive response, and that not having a plan yet is a failure.

It usually is not. With limited exceptions covered below, most inherited assets can sit while you get your footing. Money parked for six months rarely causes lasting damage. A rushed decision made in month two can.

The exceptions that do carry timelines are worth identifying early, which is the first real task. Find out what you actually received "An inheritance" is not one thing, and the differences matter more than the total.

Cash from a bank account behaves differently than a taxable brokerage account, which behaves differently than an inherited retirement account, which behaves differently than real estate or a stake in a business.

The distinctions that matter most:

Retirement accounts have rules and clocks. Inherited IRAs and similar accounts carry distribution requirements, and those rules have changed in recent years and depend on your relationship to the person who died and other factors. This is the category most likely to carry a deadline, and it is worth getting specific guidance early rather than assuming the account can simply sit.

Taxable investments generally receive different tax treatment than the original owner had. How inherited investments are treated for cost basis purposes is not the same as how they were treated in the hands of the person who owned them, which affects what a sale would cost you. This is worth understanding before you sell anything.

Real estate and business interests bring obligations, not just value. Property taxes, insurance, maintenance, co-owners, and in the case of a business, ongoing operational decisions.

You cannot plan around any of this until you know which categories you are holding and in what proportion.

Deal with the paperwork you can control There is an administrative layer that is tedious and entirely within your control, and getting through it early tends to reduce the background stress of the whole situation.

Consolidating accounts you now hold in several places. Updating your own beneficiary designations, since your estate picture just changed materially. Reviewing your own documents, which may have been drafted when your circumstances were different.

None of this is exciting. All of it is easier to do while the paperwork is already out.

Then ask what the money is for This is the part that gets skipped, and it is the part that determines whether an inheritance changes anything.

The default outcome for a sudden increase in assets is absorption. It goes into the general balance, spending adjusts upward slightly, and a few years later it is difficult to point to anything the money did.

The alternative is deliberate assignment. Some of it retires debt. Some of it funds a goal that was previously out of reach or was going to require another decade. Some of it is invested for a purpose with a horizon attached. Some of it, often, is meant to honor the person it came from, whether through a gift, a fund, or something the family decides together.

There is no correct allocation. There is a meaningful difference between choosing one and drifting into one. Bring in the right people, in the right order An inheritance frequently involves an estate attorney, a tax professional, and a financial adviser, and it works best when those three are talking to each other rather than being consulted separately about overlapping questions.

What we do is help make sense of what you received, how it fits your existing picture, and what the options actually are, working alongside the professionals handling the pieces that we don’t.

The short version Slow down. Find out what you received, category by category. Identify anything with a deadline, particularly retirement accounts. Handle the administrative layer. Then decide, deliberately, what the money is for.

If you are in the middle of this and it feels like more than you should have to figure out during a hard year, that is a normal reaction, and it is a reasonable time to ask for help.

Book a consultation at willallan.com.

Informational purposes only. Not investment, tax, or legal advice. Inherited assets are subject to rules that depend on the type of account, your relationship to the decedent, applicable state law, and current federal law, all of which are subject to change. William Allan does not provide legal or tax advice or estate administration services. Consult a qualified attorney and tax professional regarding your specific situation. All investing involves risk, including possible loss of principal. William Allan is an investment adviser registered with the SEC; registration does not imply any specific level of skill or training.