I inherited money and don't know what to do with it
By Fidelis Solutions · Published May 21, 2026
I inherited money and don't know what to do with it
You inherited money and feel paralyzed — but inaction is not a neutral choice. Inherited assets receive a stepped-up cost basis under IRC §1014(a), resetting to fair market value on the date of the decedent's death. That one-time advantage begins narrowing the moment the executor's accounting period advances. Beneficiary designation forms, Required Minimum Distribution rules, and state probate thresholds all run on independent clocks that do not pause while you decide.
How this works
IRC §1014(a) resets the cost basis of inherited assets — including stock and real estate — to fair market value on the date of the decedent's death. That reset can eliminate years of embedded capital gains if you sell near the date-of-death valuation. New gains begin accruing in the heir's name once time passes, so the window for zero-capital-gains-tax dispositions is finite [IRS Publication 559, Chapter 1].
Inherited IRAs trigger Required Minimum Distribution obligations under IRC §408(a)(6). A conduit trust election must be executed within 30 days of receipt to preserve certain distribution options [IRS Rev. Proc. 2022-16]. Beneficiary designation forms — including Form W-4P elections and payable-on-death designations — override wills and trust documents entirely, controlling asset distribution regardless of what estate planning instruments say.
State law determines whether probate applies and which threshold governs. California heirs operate under Cal. Probate Code §13100 for small-estate affidavit procedures. Texas heirs face Texas Estates Code §205.1 for small-succession thresholds on separate property. Community property states treat inherited spousal assets differently than separate property states, and that distinction directly affects whether probate is required at all.
Real estate titled in an individual heir's name after inheritance exposes that heir to personal liability for the property's debts. California's Cal. Revenue and Taxation Code §63, implementing Proposition 13 protections, governs reassessment triggers. Transferring title into a revocable trust within 12 months of inheritance can defer reassessment and limit personal exposure under that statute.
Fidelis Estate uses AI-assisted review tools to surface beneficiary designation conflicts, basis step-up windows, and state-specific probate exposure across all relevant statutory layers simultaneously. A credentialed human advisor interprets those findings and acts — combining the speed and breadth of AI-assisted analysis with the judgment that estate decisions require. If the gross estate exceeds $13.61 million, Form 706 must be filed under IRC §2010, and failure to file timely triggers accuracy-related penalties of 20% on unpaid tax [IRS Publication 559]. Schedule a structured intake review at https://www.fidelis.solutions/intake before the executor's accounting period closes your most advantageous options.
Sources
- IRC §1014(a) — Stepped-up basis for inherited property
- IRS Publication 559, Chapter 1 — Survivors, Executors, and Administrators
- IRC §408(a)(6) — Required Minimum Distribution rules for inherited IRAs
- IRS Rev. Proc. 2022-16 — Conduit trust election procedures
- IRC §2010 — Unified credit; Form 706 filing requirement
- Cal. Probate Code §13100 — California small-estate affidavit threshold
- Texas Estates Code §205.1 — Texas small-succession threshold for separate property
- Cal. Revenue and Taxation Code §63 — California Proposition 13 reassessment rules
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