Introduction: When Sudden Wealth Arrives
The generation known as Baby Boomers (born between 1946 and 1964) holds an estimated $93 trillion in assets, and the largest generational wealth transfer in American history is already underway.1 Over the next two decades, that wealth will move through estates, trusts, and direct inheritances. The heirs who receive significant assets may have little experience managing a sum of this magnitude. If you’re one of them, or expect to be, you’re navigating a time that is simultaneously financial, legal, emotional, and deeply personal.
The top 1% of households receive average inheritances of nearly $719,000, while roughly 70%-80% of U.S. households will never receive any inheritance at all.2
This playbook is designed for families who have accumulated meaningful wealth and are now navigating a large inheritance — whether from a parent, a spouse, or a family trust. It won’t tell you how to feel. It will offer advice on what to do, in what order to do it, and why so that the wealth you’ve received can work as hard for your future as the person who built it intended.
The First 90 Days: Your Stability Protocol
Days 1-30: Pause, park, and protect
One of the most important decision you can make immediately after receiving a significant inheritance is this: Don’t make any irreversible decisions.
Grief, surprise, family pressure, and financial complexity can converge in ways that lead even financially sophisticated people to act too quickly. Research consistently shows that wealth received through inheritance dissipates faster than wealth built over time.4 The antidote isn’t a great investment decision made at the funeral reception — it’s a deliberate pause.
Park the money safely. Until your advisory team is assembled and a coordinated plan is in place, liquid inherited assets may be placed in FDIC-insured bank accounts, U.S. Treasury money market funds, or short-term Treasury instruments. This isn’t a long-term strategy. It’s a holding position while you create the strategy. The goal is capital preservation and immediate liquidity, not yield optimization.
Sudden wealth doesn’t have to feel overwhelming.
Identify what you’ve inherited. Begin gathering documentation: the will or trust agreement, account statements, beneficiary designations, and any real estate deeds. You might have inherited assets in multiple forms, and each comes with different tax treatment, different legal requirements, and different timelines for action. You may get transfers from brokerage accounts, IRAs, and real estate. Possibly you’ll get assets from a business interest.
Days 31-60: Assemble your advisory team
Managing a significant inheritance well can be done with a team, not a single advisor. The decisions you’ll face over the next 12 months span disciplines that no single professional can address comprehensively alone. You’ll likely need to make choices on tax planning, investment deployment, retitling, and estate plan updates.
Be cautious of advisors who operate in silos or who rush to move assets before the full picture of your financial situation is understood.
At Mercer Advisors, we offer a team that includes:
- A fee-based, fiduciary wealth advisor to coordinate the overall strategy and serve as the central point of integration.
- An estate planning strategist to handle probate, retitling, trust administration, and updates to your estate documents.
- A CPA or tax advisor to model the tax implications of your inheritance, including income recognition, capital gains treatment, and required minimum distribution (RMD) planning for inherited retirement accounts.
The team works together, sharing information and aligning recommendations across disciplines.
Days 61-90: Understand what you’ve inherited
With a team in place, your next step is a thorough analysis of the specific assets you’ve received. This phase is diagnostic, and the goal is clarity before action.
Key questions to answer with your advisory team:
- What is the cost basis of inherited securities, and has a step-up in basis been properly applied?
- Do any of the inherited IRAs have RMD obligations?
- Are any assets still in probate, or are they transferring through a trust or by beneficiary designation?
- What state estate or inheritance taxes may apply?
- What is the liquidity profile of the estate? Are assets readily convertible to cash, or are they illiquid (real estate, business interests, private funds)?
- Does the estate have any debts or obligations that affect what you ultimately receive?
The First 90 Days: Your Stability Protocol
A step-by-step framework for the first three months after receiving a significant inheritance.
Days 1-30: Pause, park, and protect
- Make no irreversible decisions.
- Park liquid assets in FDIC-insured or Treasury money market accounts.
- Gather will, account statements, and beneficiary designations.
Days 31-60: Assemble your advisory team
- Engage a fee-based, fiduciary financial advisor.
- Retain an estate planning attorney or specialist for retitling and probate.
- Bring in a tax professional to model tax and RMD implications.
Days 61-90: Understand what you’ve inherited
- Confirm step-up in basis for inherited securities.
- Identify inherited IRA RMD obligations and deadlines.
- Map liquidity, state taxes, and any estate obligations.
Months 4-12: Your 12-Month Roadmap
When you have a clear picture of what you’ve inherited, your advisory team can begin executing a coordinated plan. You should generally address the following five priorities in sequence, though your specific situation may require a different order.
1. Tax hold-back: Protecting yourself from a surprise bill
Inherited assets can generate taxable income sooner than many heirs expect. Before deploying capital into long-term investments, work with a tax professional to model potential tax obligations, including:
- Income from inherited retirement accounts. Distributions from a traditional inherited IRA are taxed as ordinary income. Depending on the timing and size of distributions required under the 10-year rule, these distributions can meaningfully affect your tax bracket in the year received.
- Capital gains on inherited real estate or a business. If you inherit real estate or a closely held business and plan to sell it, the proceeds may be subject to federal and state capital gains tax — even after the step-up in basis.
- State inheritance taxes. As of 2026, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania impose an inheritance tax paid by beneficiaries.5 Rates for nonimmediate-family heirs can reach 15% to 16%.
A practical approach: Set aside an estimated tax reserve before making any investment deployments. It’s often 20% to 30% of liquid inherited assets. Your tax professional can refine this figure based on your specific situation.
2. Retitling and beneficiary updates
Inherited assets must be retitled correctly before they can be managed efficiently or protected legally. Brokerage accounts passing by beneficiary designation transfer to an inherited account in your name; real estate requires deed transfer through probate or trust administration; and closely held business interests may require coordination with other shareholders and legal counsel.
In parallel, update your own estate documents to reflect your new financial picture. If you’ve materially changed your net worth, your existing will, trust documents, and beneficiary designations may no longer reflect your intentions.
3. Initial investment deployment
After the tax picture is clear and assets are properly titled, you can begin deploying capital in alignment with your long-term financial plan.
Key principles to consider:
- Coordinate with your existing portfolio: An inheritance isn’t a matter for isolation — see it as part of your overall financial picture. Any deployment should be evaluated in the context of your full asset allocation, tax situation, and goals.
- Avoid concentration: If the inheritance includes a large block of a single stock or a concentrated position in a family business, consider a diversification strategy spread over time to manage both tax implications and behavioral risk.
- Use a phased approach: Deploying significant capital all at once can create market timing risk and emotional regret if markets move adversely shortly after investment. A systematic deployment over six to 18 months may help reduce both.
- Consider tax-advantaged vehicles: Inherited cash may be directed toward maximizing contributions to tax-advantaged accounts, funding a donor-advised fund, or using other tax-efficient strategies that seek to reduce your overall tax burden.
4. Updating your estate plan
Receiving a significant inheritance makes your own estate plan more important — not less. Your new financial picture may warrant a review and update of your will and revocable trust, new or updated powers of attorney, beneficiary designation updates across all accounts, and consideration of appropriate trust structures given your expanded net worth. Consider spousal lifetime access trusts (SLATs), irrevocable life insurance trusts (ILITs), or charitable structures.
The One Big Beautiful Bill Act (OBBBA), signed in July 2025, permanently increased the federal estate, gift, and generation-skipping transfer (GST) tax exemption to $15 million per individual — $30 million for married couples — effective Jan. 1, 2026. While this provides significant planning flexibility for many families, state estate and inheritance taxes remain a meaningful planning consideration in a number of jurisdictions.
5. Values and purpose work
The financial plan is the architecture. The purpose behind it is the foundation. Before making final decisions about how inherited wealth is deployed, many families find it valuable to engage in values-based planning conversations with their advisor.
Questions worth exploring:
- What did this person’s legacy mean to your family — and how does your financial plan honor that?
- What causes or communities do you want your wealth to support?
- How do you want the next generation to experience or learn about this wealth?
- What does financial security look and feel like for you — and does your plan reflect that definition?
Inheritance-Specific Rules You Need To Know
Step-up in basis
When you inherit appreciated assets — stocks, real estate, a business interest — the cost basis of those assets is generally “stepped up” to the fair market value at the date of the decedent’s death. This means that if you sell inherited securities shortly after receiving them, you may owe little or no capital gains tax, regardless of how much the original owner paid.
This rule applies to assets inherited outright or through a revocable living trust. It generally does not apply to assets received as lifetime gifts, assets held in irrevocable trusts already removed from the estate, or assets held in retirement accounts.
Hypothetical example:
Inherited IRAs and the 10-year rule
If you’ve inherited a traditional IRA or 401(k) from someone who was not your spouse, the rules governing distributions are critically important. Note that the rules have changed in recent years.
Under the SECURE Act of 2019, most nonspouse beneficiaries — adult children, siblings, friends — are required to fully distribute inherited IRAs by Dec. 31 of the 10th year following the original account owner’s death. This is known as the 10-year rule.
The IRS issued final regulations in July 2024, effective for the 2025 distribution year forward, adding an important nuance.6
- If the original owner died before their required beginning date (RBD), no annual RMDs are required during years 1-9. You may take distributions in any amount, at any time, as long as the account is fully depleted by Dec. 31 of year 10.
- If the original owner died on or after their RBD (generally age 73 or older), you must take annual RMDs in each of years 1 through 9, calculated using your life expectancy. The remaining balance must be fully distributed by year 10.
The IRS waived penalties for missed inherited IRA RMDs from 2021 through 2024. Those waivers have ended. Starting in 2025, missing a required distribution triggers a 25% excise tax on the shortfall. That tax is reduced to 10% if corrected within two years.
Spouses who inherit IRAs have more flexibility: They may treat the inherited IRA as their own, which resets the distribution clock entirely.
Inherited IRA: 10-Year Rule At A Glance
IRS regulations in 2024 apply to noneligible designation beneficiaries.6
| Category | Owner died before RBD | Owner died on or after RBD |
|---|---|---|
| Annual RMD years 1-9 | Not required. No annual distributions mandated; beneficiary may withdraw any amount or nothing each year. | Required annually. Based on the longer of the beneficiary’s or owner’s single life expectancy. |
| Year-10 deadline | Full account balance must be distributed by Dec. 31 of the tenth year following the owner’s death. | Full account balance must be distributed by Dec. 31 of the tenth year following the owners death. |
| Penalty for missed RMD | 25% excise tax on the amount that should have been distributed. Reduced to 10% if corrected within two years. | 25% excise tax on the amount that should have been distributed. Reduced to 10% if corrected within two years. |
Conclusion: Building From Here
Receiving a large inheritance is one of the most financially significant events of your life. And one of the most emotionally complex. The families who protect and grow inherited wealth over time share a specific discipline: They pause before acting, assemble the right team, and build a coordinated plan before deploying capital.
The 90-day protocol and 12-month roadmap outlined in this guide are designed to give you that structure and to help ensure that the decisions you make in the early days of this transition serve your family for generations.
If you have questions about how to approach the aspects of your specific inheritance — IRA distribution planning, investment deployment, estate plan updates — a Mercer Advisors team is here to help. For 40 years, we’ve been trusted to help families amplify and simplify their financial lives.
We offer comprehensive wealth management through a family office structure, bringing together expertise in financial planning, investment management, tax planning and preparation, estate planning, insurance solutions, and more into one integrated offering.
Are you ready to build your inheritance plan?
FAQs
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Before making any investment or spending decisions, focus on three steps: Park liquid assets in a safe, FDIC-insured or government-backed account; gather documentation (account statements, will, trust documents, beneficiary designations); and identify an advisory team — a fiduciary wealth advisor, estate attorney, and tax professional — who can coordinate a comprehensive plan. The most important thing you can do in the first 30 days is avoid irreversible decisions.
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In most cases, assets you inherit are not subject to federal income tax simply because you received them. However, income generated by inherited assets — such as distributions from an inherited traditional IRA or proceeds from selling inherited real estate at a gain — may be taxable. As of 2026 Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania impose a state-level inheritance tax on beneficiaries who are not immediate family members. Your CPA can model your specific obligations based on what you’ve inherited and where you live.
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When you inherit an appreciated asset — such as stocks, real estate, or a business interest — the cost basis of that asset is generally reset to its fair market value on the date of the original owner’s death. If you sell the asset shortly after inheriting it, you may owe little or no capital gains tax, regardless of how much the original owner paid. This is one of the most significant tax benefits available to heirs, and it’s a one-time opportunity that cannot be recreated through future planning.
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If you inherit a traditional IRA from someone who was not your spouse, you are generally subject to the 10-year rule under the SECURE Act: The entire account must be distributed by Dec. 31 of the 10th year after the original owner’s death. If the original owner had already begun taking required minimum distributions (RMDs) before they passed, you must also take annual RMDs during years 1 through 9 — a requirement the IRS finalized in July 2024 and began enforcing fully in 2025. Surviving spouses have more flexibility and may treat an inherited IRA as their own. A wealth advisor and CPA should help you model a distribution schedule that seeks to minimize your income tax exposure across the full 10-year window.
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Deploying a significant inheritance as a lump sum carries real risks: market timing uncertainty, emotional regret if values decline shortly after investment, and the potential to disrupt your existing asset allocation. A phased deployment — often over six to 18 months — may help reduce those risks while still putting your capital to work. Your wealth advisor should evaluate any deployment strategy in the context of your full financial picture, including your existing portfolio, tax situation, time horizon, and goals.
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Receiving a significant inheritance is a triggering event for estate plan review. Work with your estate planning attorney to revisit your will, revocable trust, powers of attorney, and beneficiary designations to ensure they reflect your updated financial picture and current intentions. Depending on your net worth, you may also want to explore trust structures — such as spousal lifetime access trusts or irrevocable life insurance trusts — that can help protect and transfer your expanded wealth efficiently. The OBBBA permanently increased the federal estate and gift tax exemption to $15 million per individual effective Jan. 1, 2026, providing meaningful planning runway for families at this wealth level.
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Sudden wealth syndrome describes the financial and emotional stress that can accompany an unexpected or significant windfall — including an inheritance. Research shows that inherited dollars are dissipated faster than other forms of wealth — often because heirs act quickly, without a plan, and without professional guidance. An effective protection is a structured planning process: Pause before acting, assemble a coordinated advisory team, and take the time to align your financial decisions with your values and long-term goals.
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While working with a wealth advisor after receiving an inheritance is not a legal requirement, the complexity of the decisions involved — tax planning, investment deployment, retitling, estate plan coordination, inherited IRA distribution strategy — makes professional guidance highly valuable. Look for a fee-only fiduciary advisor who is legally obligated to act in your best interests and who has experience with inherited wealth, estate coordination, and tax-sensitive investment management. Mercer Advisors offers comprehensive financial planning that coordinates across investment management, tax planning, and estate strategy — contact us at merceradvisors.com to arrange a complimentary consultation.
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1 “The Great Wealth Transfer Is Already Reshaping How Americans Spend.” Visa, July 8, 2026.
2 “Only 30% of Americans Ever Receive an Inheritance. Those Who Do Get It at 58, Not 30.” Yahoo Finance, June 24, 2026.
3 “Dissipation of Inheritance Windfalls and the Case for Time-Phased Transfers: An Empirical Assessment From HRS Data.” Financial Services Review, March 31, 2026.
4 “Dissipation of Inheritance Windfalls and the Case for Time-Phased Transfers: An Empirical Assessment From HRS Data.” Financial Services Review, March 31, 2026.
5 “16 States With Estate or Inheritance Taxes.” AARP, March 31, 2026.
6 “2025 Publication 590-B.” IRS.gov, Jan. 21, 2026.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. All investing involves risk, including the possible loss of principal. Hypothetical examples are for illustrative purposes only.
For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
Mercer Advisors is not a law firm and does not provide legal advice to clients. All Estate planning document preparation and other legal advice are provided through select third parties, with which Mercer Advisors has a contractual relationship. Mercer Advisors Tax Services, LLC, does not provide financial audit, assurance, compilations, or forensic accounting services. Each individual tax situation is unique, depending on complexity, additional fees may apply. Insurance products are provided by Mercer Advisors Insurance Services, LLC (MAIS), which places individual life, disability, long term care coverage, and property and casualty coverage through select insurance companies. Trustee services are offered through select third parties with which a client would sign an additional agreement, and additional fees may apply.
