INHERITANCE

Antonio’s father passed away in February. Because Antonio was a co-owner of his father’s bank accounts, he was able to use those funds to cover funeral expenses. A few weeks later, Antonio and his sister, Marcy—who had lost their mother several years earlier—sat down to organize their father’s mail and financial records.

During that process, they discovered statements from an investment firm showing an IRA valued at nearly $2 million and a taxable investment account holding approximately $300,000 in stock. They also located their father’s will, which named Antonio as executor and listed Antonio and Marcy as equal beneficiaries.

When they contacted the investment firm, they learned the IRA named them directly as beneficiaries, while the taxable brokerage account had no beneficiary designation and would need to pass through their father’s estate. Although they completed the required paperwork, Antonio and Marcy felt overwhelmed managing such a significant inheritance, especially after learning online that there could be substantial tax implications.

At the recommendation of a close friend, Antonio reached out to us. We met with Antonio and Marcy to explain the different types of accounts their father owned, how inherited IRAs work, the probate process, and the importance of stepping up the cost basis on inherited stocks to their value on the date of death. Our goal was not only to provide professional guidance, but also to ensure Antonio and Marcy fully understood what was happening with their money.

After this educational meeting, we scheduled separate conversations to focus on their individual situations. Antonio is a divorced father of two, while Marcy and her wife, Therese, are planning their future together.

Antonio’s initial research had been correct—inheriting an IRA can significantly impact your taxes. In follow-up meetings, we reviewed his current 401(k), retirement goals, and his desire to help his teenage sons with college expenses. A key consideration was the SECURE Act, passed in 2019, which generally requires non-spouse beneficiaries to withdraw inherited retirement accounts within ten years, potentially increasing taxable income for working beneficiaries like Antonio.

With a full understanding of Antonio’s financial picture, we developed a tax-efficient distribution strategy that can be adjusted over time as circumstances change. We also aligned his investment strategy to support both retirement and education goals.

In our meeting with Marcy and Therese, we learned that Marcy has an immune disorder that qualifies her for disability benefits. Importantly, this means she is not subject to the same inherited IRA distribution rules as Antonio—something she was unaware of. With that knowledge, we created a plan to use the inherited IRA to supplement Marcy’s disability income in a tax-efficient way. This approach allowed Therese to increase her own retirement savings and significantly strengthened their long-term outlook.

We find deep satisfaction in helping clients navigate emotionally difficult and financially complex moments. Inheriting money can feel like walking through a field of landmines—one misstep can have unintended consequences. We’re here to help clients move forward with clarity, confidence, and a plan they can trust.

The scenario described is hypothetical and is intended solely to illustrate the types of financial planning services that may be provided. It does not represent the experience of any specific client. Actual client experiences and outcomes will vary depending on individual circumstances and it should not be interpreted as a guarantee of future results or client experience.