Common Questions When Inheriting Assets
November 2019

How long does it take to receive an inheritance? A key factor is how the assets were titled. • For assets titled solely in the deceased’s name, there will likely be a probate process which can delay the distribution of assets for several months.

• Assets held as joint tenants with rights of survivorship (JTWROS) or with the designation of Transfer On Death (TOD), may be distributed within days after presenting a certified death certificate to the financial institution.

• IRAs, retirement plans, and life insurance policies with a named beneficiary may also be distributed within days or weeks after presenting a certified death certificate to the financial institution.

• The timing of the distribution of assets held in the name of a trust depends on the terms of the trust and whether other obligations such as taxes, debts, and final expenses need to be paid prior to making distributions.

Will I have to pay taxes on the assets I receive through an inheritance? • Generally, there are no income taxes due as a result of receiving an inheritance.

• A common exception is when you are named a beneficiary of a Traditional IRA or qualified retirement plan, such as a 401(k) plan. If you receive the IRA or retirement plan assets outright the amount received will be taxable income in the year you receive it. You can avoid immediate taxation of the full account by transferring the retirement account assets into an Inherited IRA. You are required to draw a specified amount from the Inherited IRA each year over your lifetime - which will be taxable income.

• If you receive assets such as mutual funds or individual stocks from a regular investment account (not held in an IRA or retirement plan) there is no income tax due upon receipt. If/when you sell the inherited financial asset, there may be capital gains tax due. Your capital gain will be determined by the difference between the value of the asset on the date of death and the value at the time of sale. This is due to what is commonly referred to as the “step-up” in cost basis. For example, assume Joe purchased IBM stock in 1995 for $10,000 and the value of the stock on the day he died was $60,000. If you inherit Joe’s stock your cost basis is stepped-up to $60,000. If you sell the stock immediately there would be no capital gains tax.

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Common Questions When Inheriting Assets
November 2019

Financial planning for life

Your best interests. Our first priority.

Our sole purpose is to be your trusted advisor.

We work with our clients to identify opportunities, limit financial risks, minimize tax liabilities, and plan a lifetime financial strategy.

We work out of offices in...

Fee-only, individualized service suits our diverse clientele.

Find resources for...

Common Questions When Inheriting Assets November 2019

Common Questions When Inheriting Assets
November 2019