What Should I Do With Inherited Investments?

Please Share!

Inherited investments can seem overwhelming.

People invest in a number of ways.

This includes real estate, securities, art, and collections to name a few.

When you inherit an investment, you may wonder what you should do with it.

According to a recent Wealth Advisor article titled “How to Handle Inherited Investments,” some actions are smarter than others.

What can you do?

Inherited investments include real estate.
Real estate is an example of inherited investments.

Consider Cash.

When assets can increase in value, they are considered appreciated assets.

Some have favorable tax consequences.

For example, real estate will receive a step-up in basis when inherited.

What does this mean?

Any increase in value during the lifetime of the decedent will be reset to the value on the date he or she died.

When this happens, the heir will not need to pay a capital gains tax on the investment up to that date of death value.

If the heir sells the asset, capital gains taxes will only be owed on gains from the date of inheritance to the date of sale.

Some inherited investments carry greater risk of loss than others.

Moving some of these into cash, cash equivalents, or life insurance with a guaranteed payout can protect you from these risks.

Beware of Concentration Risk.

What is concentration risk?

Concentration risk occurs when investments are tied up heavily in a certain asset.

This may work on a short-term basis, but you could lose everything if the investment drops.


To minimize this risk, diversify your portfolio with assets in different sectors.

Learn about Trusts.

Did you inherit assets through a trust?

Do everything you can to understand the terms and structure of the trust.

A trustee may hold all fiduciary duties, but this can change.

The terms of the trust may dissolve the trust or transfer trustee responsibilities to beneficiaries when they reach a certain age.

You will need to plan the next steps in this situation.

If the inheritance is distributed outright and free of trust to you, then one option is to create your own trust to manage your inherited assets.

Regardless, you will want to understand how revocable and irrevocable trusts impact inherited investments.

Inherited investments can be a wonderful blessing when managed wisely.

Reference: Wealth Advisor (Jan. 7, 2020) “How to Handle Inherited Investments”

Get All The Marketing Updates
Recent Posts
Search Our 2,400 Blog Post Archive